Not only is private equity a hot topic in Latin America, it’s an increasingly important source of revenue for the region’s law firms. In part two of our private equity focus, Marieke Breijer dives into the history of some of the most visible international and local funds, looking back on their activity in the region and the firms they hired for the biggest deals

Non-Latin Funds

Brookfield Asset Management

Canada-based Brookfield Asset Management has committed some US$6.3 billion to Latin American funds, and has invested in Brazil, Chile, Peru and Colombia. The fund manager has some US$1.6 billion invested in Brazil-specific funds acting in the retail, timber and agriculture sectors, and has relied on a number of firms for its investments in the country. Its retail fund, Brascan Brazil Real Estate Partners, turned to Pinheiro Neto Advogados in its US$935.5 million acquisition of Plaza Shopping Trust in 2008, while Pinheiro Guimarães - Advogados helped Brookfield acquire a US$193 million energy asset from the Bertin Group in July 2011. Machado, Meyer, Sendacz e Opice Advogados advised Brookfield Renewable Power Fund on its proposed merger with Brookfield Asset Management, announced in September 2011, to create Brookfield Renewable Energy Partners. Machado Meyer won the client through Brookfield’s Canadian advisors, Heenan Blaikie.

Brookfield’s most recent investment in Chile was in December, when Carey y Cía worked with Canada’s Torys to help it acquire stakes in the San Cristóbal tunnel and in the Vespucio Norte Express toll road. In 2006, Brookfield led a consortium of private equity investors to buy Chile’s main electricity provider for US$1.69 billion. The consortium relied on Philippi, Yrarrázaval, Pulido & Brunner for local advice, and on Weil Gotshal & Manges in the US, Stikeman Elliott in Canada, Appleby Spurling Hunter in Bermuda, while Brookfield itself also took counsel from Canada’s Goodmans.

With the assistance of Baker & McKenzie (Colombia) and independent practitioner Andrés Crump, Brookfield set up a US$320 million fund for Colombian infrastructure in 2009. In Peru, Hernández & Cía Abogados helped Brookfield win a bid to manage a fund sponsored by the Inter-American Development Bank, the Andean Development Corporation and the Peruvian government. The firm was also involved when the US$440 million fund was launched late 2010.

Advent International

Advent is one of Latin America’s most visible private equity funds, with activity concentrated in Mexico, Brazil, Argentina and Colombia. Advent has five funds dedicated to the region, with a combined committed capital of US$3.8 billion. It closed its fifth and largest fund – with US$1.65 billion of committed capital – in 2010. A handful of firms have won work relating to Advent’s movements in Brazil. Last year, Barbosa Müssnich & Aragão helped Advent and Brazilian bank Itaú Unibanco sell off a stake in Latin America’s largest clearinghouse, Cetip, and teamed up with TozziniFreire Advogados to assist the asset manager in its acquisition of 50 per cent of container port terminal Terminal de Contêineres de Paranaguá (TCP). Also in 2011, Advent relied on Lefosse Advogados and Davis Polk & Wardwell to help its food retail investment arm, the International Meal Company (IMC), raise US$247.5 million through an IPO on BM&F Bovespa. In 2008, Advent hired Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados to buy Brazilian home-improvement retailer Lojas Quero-Quero, while Souza, Cescon, Barrieu & Flesch Advogados helped Advent-controlled global travel retailer Dufry merge with Brasif Travel Retail two years previously.

Advent made its first foray into Colombia in late 2011 alongside Essex Ventures. The pair hired Colombia’s Prietocarrizosa, US firm Cleary Gottlieb Steen & Hamilton, Spain’s Uría Menéndez and Luxembourg’s Bonn Schmitt Steichen for their acquisition of pharmaceutical products distributor Biotoscana Farma in late 2011.

The fund has invested in Mexican assets throughout much of the 2000s, turning to Mijares, Angoitia, Cortés y Fuentes SC for the bulk of its deals. The Mexican firm helped Advent sell a stake in IT securities provider Scitum to Telmex in 2010 and saw it through its acquisition of Grupo Gayosse, active in the country’s cemetery and funerary services sector. Mijares teamed up with Weil, Gotshal & Manges when Advent bought 90 per cent of homebuilding group Javer in 2007, while the Mexican firm helped the fund acquire 70 per cent of Mexican software company Hildebrando in late 2002. Galicia Abogados has also done work for Advent, teaming up with Wiggin and Dana for its purchase of Mexico’s biggest discount clothes retailer, Controladora Milano. The clothing retailer then relied on Galicia when it acquired women’s clothing chain Melody.

Advent has turned to Posadas, Posadas & Vecino for its Uruguayan portfolio. In 2006, Posadas Posadas, along with Wildgen & Partners in Luxemburg and Goodwin Procter in the US, helped Advent acquire the country’s largest bank, Nuevo Banco Comercial, while in 2010 the Uruguayan firm and Argentina’s Garrido Abogados helped Advent sell consumer credit company Pronto!. Advent has not been visible in Argentina in recent years, although it has invested there in the past, relying on Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (h) for legal advice; Advent turned to the firm to buy all of private mail company Organización del Clearing Argentino (OCA) in early 2004, and to sell generic drug maker Fade Pharma to Polygon labs in 2006.

The Carlyle Group

The Carlyle Group has closed significant deals in Latin America, one of its biggest being the US$1.3 billion acquisition of Brazilian health insurer Qualicorp in 2010, for which it hired Barbosa Müssnich & Aragão and Latham & Watkins. It has also worked with Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados and Debevoise & Plimpton in closing a US$776 million offshore fund in June 2011, after having previously worked with the firms to close a US$227 million fund with Brazilian state-run bank Banco do Brasil in 2010. Pinheiro Neto Advogados has helped the group in several deals relating to the acquisition and sale of stakes in Brazilian undergarment manufacturer Scalina in 2010 and 2011.

Compass Group

The Compass Group is seen most in Peru, where it regularly relies on the counsel of Hernández & Cía Abogados, such as in the launch of its SME-financing investment fund in 2004, and more recently for the transfer of responsibilities for Compass Fondo de Inversión de Capital Privado I to Faro Capital – which was assisted by Estudio Ferrero Abogados – in October 2011.

Aureos Capital

UK-based Aureos Capital specialises in investing in small to medium-sized businesses in emerging markets. In Peru, Hernández & Cía represented Aureos in purchasing 40 per cent of travel operator Cóndor Travel, in what was the country’s first ever management buyout operation combined with a private equity investment, in February 2011. Hernández & Cía’s relationship with Aureos dates back to 2009, when the firm helped it acquire a minority stake in Peruvian fashion accessories retailer Iasacorp. In Colombia, Posse, Herrera & Ruiz Abogados and Debevoise & Plimpton have helped Aureos bring in investors for its fund there.

General Atlantic

General Atlantic’s Brazilian fund made its first acquisition in 2008, when it invested in healthcare brokerage and benefits administration services company Qualicorp, with the help of Machado, Meyer, Sendacz e Opice Advogados. Since then, the fund has also worked with Pinheiro Neto Advogados and Paul, Weiss, Rifkind, Wharton & Garrison. The two firms helped the fund when it teamed up with private equity fund Tiger Global to invest in internet business Peixe Urbano. Pinheiro Neto was also involved when General Atlantic invested in software company Linx in July 2011.

Apax Partners

Apax invests globally in five sectors: financial services, health care, media, retail consumer, technology. Its standout deal in Latin America is its US$950 million acquisition of a stake in Brazilian IT and business services outsourcer Tivit. Barbosa Müssnich & Aragão and Skadden, Arps, Slate, Meagher & Flom assisted Apax in the deal. Tivit’s sellers included Brazilian fund Pátria Investimentos, which took counsel from Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados.

Darby Overseas Investments

Darby Overseas Investments is a US investment fund with an emerging markets focus. Lefosse Advogados advised Darby in a sophisticated mezzanine financing deal with Bioenergy Geradora de Energia for the construction of four wind power plants and helped it operate as one of Brazil’s first debt-financed infrastructure funds, to invest in São Paulo-based grain terminal T-Grão Cargo Terminal de Granéis. In 2010, Greenberg Traurig and Mexican firm Ritch Mueller SC helped Darby Overseas Investments position itself to finance Mexico’s housing deficit by buying a minority stake in Controladora Vertice, while Gómez-Pinzón Zuleta Abogados SA advised an infrastructure fund jointly owned by investment groups Darby and Colpatria which attracted US$90 million from institutional investors in Colombia.

Brazilian Funds

Gávea Investimentos

Brazil’s Gávea Investimentos has four active funds, with a combined US$4.1 billion in committed capital. Gávea is one of the country’s more visible private equity houses, not least because JPMorgan’s global alternative asset manager, Highbridge Capital Management, bought a majority interest in it in 2010. For that deal, Gávea relied on Barbosa Müssnich & Aragão and Trindade – Sociedade de Advogados in Brazil, and SNR Denton in the US, while JPMorgan relied on Pinheiro Neto Advogados and Wall Street firm Cahill Gordon & Reindel.

For its own investments, Gávea has turned to various firms. In 2011, Veirano Advogados and Simpson Thacher & Bartlett helped the fund acquire 5 per cent of Odebrecht’s oil and gas unit and Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados helped Gávea acquire a minority stake in diagnostic medical services company Instituto Hermes Pardini. For investments in earlier years, it relied on Motta, Fernandes Rocha – Advogados and White & Case to acquire common shares of Brazilian sugar and ethanol producer Cosan worth US$130 million, while Trench, Rossi e Watanabe Advogados helped it to buy a 15 per cent stake in drugstore chain Droga Raia, both deals were in 2008.

In 2007, Gávea hired Clifford Chance when it backed Arcos Dorados in its acquisition of all of McDonald’s Corporation’s Latin American and Caribbean restaurants. Clifford Chance later assisted Gávea, as largest selling shareholder, in Arcos Dorados’ 2011 IPO on the New York Stock Exchange, which raised US$1.25 billion. Ulhôa Canto, Rezende e Guerra – Advogados has also been retained by Gávea to invest in CPM Braxis, when it issued US$100 million in shares in 2007, and when Capgemini bought 55 per cent of CPM Braxis some three years later.

GP Investments

São Paulo-based GP Investments is primarily focused on Brazil, where its funds invest in a large range of sectors including technology, hospitality, retail and oil and gas. Overall it has some US$2.7 billion in committed capital. Barbosa Müssnich & Aragão has been by its side for many of its activities; not least when it became the first private equity company in Brazil to launch an IPO, raising US$326 million in 2006. For that, BM&A worked with Cravath, Swaine & Moore in the US and Conyers Dill & Pearman in Bermuda. GP then hired the same firms and Loyens Winandy in Luxemburg for its US$188 million follow-on offering in 2008.

The fund also relied on BM&A to set up real estate investor BR properties with seven other private investment companies in 2006, and the law firm has helped other GP operations with various investments. In 2008 alone BM&A represented GP’s hotel business, LAHotels, when it moved into Brazil and acquired hotels in Rio de Janeiro, and helped GP buy dairy company LeitBom and a stake in a dental services company. GP-owned E&P services company San Antonio turned to BM&A and Cravath when it acquired rival Sociedade Técnica de Perfuração.

GP has relied on other firms in Brazil. In 2008 the fund turned to Ulhôa Canto, Rezende e Guerra – Advogados when it bought 20 per cent of the educational facilities network Estácio for US$157 million and Brazilian refractory bricks producer Magnesita. Since then Magnesita has turned to BM&A and Cravath for its acquisition of LWB Refractories, a German manufacturer of refractory materials for the steel and cement industries, as well as to make a US$400 million bond placement in 2010 and a US$151.7 million share sale in early 2011. In late 2007, GP Investments’ health insurance division, Tempo, hired Machado, Meyer, Sendacz e Opice Advogados to acquire a dental insurer. In 2009, GP’s BR Properties hired Machado Meyer for a US$114 million property acquisition in São Paulo state. In 2011, Lobo & de Rizzo Advogados helped GP Investments acquire a stake in car tracking company Sascar Tecnologia e Segurança Automotiva.

Outside of Brazil, in 2007, it took advice from its regular US counsel, Cravath, Argentina’s Cabanellas, Etchebarne, Kelly & Dell’Oro Maini Abogados, Guevara & Gutiérrez SC – Servicios Legales in Bolivia, Conyers in the British Virgin Islands and Creel, García-Cuéllar y Müggenburg SC in Mexico, to buy US oil drilling contractor Pride International’s Latin American land drilling and E&P service businesses.

Prosperitas Investment

Prosperitas is a Brazil-based asset management firm focused on real estate with US$1 billion in committed capital. In 2011, Prosperitas hired Lacaz Martins, Halembeck, Pereira Neto, Gurevich e Schoueri Advogados for what was called the biggest real estate transaction in the country’s history, where the firm helped it acquire 30 of the 42 properties held by real estate company Bracor. In the same year Prosperitas also turned to Koury Lopes Advogados to help sell 32-storey Eco Berrini office tower to PREVI, the pension fund for Banco do Brasil employees and to buy part of the old Brahma brewery from AmBev. It hired Barbosa Müssnich & Aragão to help increase its stake in Brazilian real estate developer Cipasa Desenvolvimento Urbano in late 2010.

Angra Partners

Angra Partners oversees three funds with a combined committed capital of US$1.5 billion. Brasil, Pereira Neto, Galdino, Macedo Advogados acted for the fund when it invested some US$80 million in port and terminal operator Rocha Top Terminais e Operadores Portuários in February 2010.

BTG Pactual Brazil Investment I

BTG Pactual is a Brazilian investment bank born out of BTG’s takeover of UBS Pactual in 2009. Its investment fund, BTG Pactual Brazil Investment I, is responsible for US$1.6 billion in committed capital. Barbosa Müssnich & Aragão, Simpson Thacher & Bartlett and Maples and Calder helped BTG Pactual set up the fund in 2011.

Vinci Partners

Brazil-based Vinci Partners was founded in 2009, and focuses on the Brazilian markets. In 2011, Vinci Partners hired Lobo & de Rizzo Advogados and Wachtell, Lipton, Rosen & Katz in a deal that saw the fund become master franchisee of the Burger King restaurants in Brazil.

Rio Bravo

Other recent activity in Brazil includes private equity fund Rio Bravo entering a US$630 million partnership with energy company Orteng in June 2011, for the construction of 11 small hydroelectric power plants, a deal where Rio Bravo was represented by TozziniFreire Advogados. Rio Bravo had taken counsel from Machado, Meyer, Sendacz e Opice Advogados when it sold its stake in insurance company UBF Seguros in September 2010.

Argentine Funds

Southern Cross Group

Argentina-based Southern Cross Group is active through three funds with a combined committed capital of US$2.7 billion and has been most active recently in Chile and Mexico. In Chile, two firms win the most work linked to Southern Cross: Barros & Errázuriz Abogados and Cariola, Diez, Pérez-Cotapos & Cía Ltda. In 2011, Cariola helped Southern Cross sell a controlling stake in the Central Tierra Amarilla power plant, while Barros & Errázuriz has done work for Supermercados del Sur, having assisted Southern Cross in its US$419 million acquisition of that and five other supermarkets in 2009. In 2007, Barros & Errázuriz and Chadbourne & Parke in the US helped Southern Cross sell water utility company Aguas Nuevo Sur Maule, and a stake in Empresa de Servicios Sanitarios del Bio-Bio, to the Ontario Teachers’ Pension Plan. The fund was represented by Cariola when it sold Chile’s Chilesat Corp to Mexico’s Telmex in 2004.

Chadbourne & Parke is often called upon by Southern Cross. In 2009, the US firm teamed up with Creel, García-Cuéllar, Aiza y Enríquez, SC to help Southern Cross and Evercore buy a controlling stake in Mexican homebuilder Javer. Southern Cross was last seen doing deals in Argentina in 2001, when the fund and Merrill Lynch Global Emerging Markets Partners LP took counsel from Bruchou, Fernández Madero & Lombardi to sell all capital stock of Armor Acquisition.

Chilean Funds

LarrainVial

In May 2010, Barros & Errázuriz Abogados helped Larrain Vial Activos place two investment funds – one for euro-denominated and another for dollar-denominated investments, with a combined value of US$88 million.

Linzor Capital Fund

Last year, Linzor sold Chile’s largest cinema chain, Hoyts Cinemas Chile, with the help of Noguera, Larraín & Dulanto and Latham & Watkins. Linzor previously relied on De la Rosa & Garcia Abogados and Latham & Watkins when it bought a stake in a Colombian pension fund in 2009. Mexico’s Mijares, Angoitia, Cortés y Fuentes SC and US firm Latham & Watkins helped Linzor Capital buy a trailer fleet service from General Electric (GE) and secure financing for the deal in Mexico in 2011.

Peruvian Funds
Enfoca
Enfoca has relied on various Peruvian firms over the years. It turned to Delmar Ugarte Abogados to make its first investment into Maestro Home Center in late 2007 and went on to take counsel from Estudio Echecopar, Cleary Gottlieb Steen & Hamilton and Anzola Robles & Associates three years later when it acquired 82 per cent of Maestro’s parent, Ace Investment. Hernández & Cía Abogados and Boies, Schiller & Flexner helped Enfoca launch its third private equity fund, Enfoca Discovery 1 LP, in 2010, while Estudio Ferrero Abogados assisted the structuring of Enfoca Capital 1, Enfoca’s first publicly traded fund, in 2011.

Data is taken from previous deal reporting by Latin Lawyer and a report made by Preqin in February 2011.

(Latin Lawyer 13.03.2012)

(Notícia na Íntegra)