Brazil’s economy has faltered this year and its currency, the real, has tumbled, making the local business environment more challenging for private equity-backed companies. At the same time, private equity investors have unused capital and can now acquire assets at lower prices.
“If you raised [funds] in dollars, now would be a very attractive time to buy,” said Cate Ambrose, president and executive director of the Latin American Private Equity and Venture Capital Association, an industry trade group. She said a 50% decline in the Brazilian real over four years has made the nation more competitive as an investment destination.
Despite an array of negative political and economic news in Brazil—including a shrinking gross domestic product, a credit downgrade to junk status and a corruption scandal—private equity investors have continued to put capital to work there. According to Lavca data, investors took part in $2.28 billion of private equity-backed deals in the first half of 2015, compared with $1.89 billion a year earlier.