How Latin America Fund Managers Are Proving Their Worth to Limited Partners

In a new SS&C Intralinks white paper, general partners discuss challenges and opportunities in the growing LATAM market.

20 May 2021

LATAM Fund_Manager Intralinks INsights

Over the past decade, Latin America’s market for alternative investments has grown substantially. The combination of low interest rates and innovation has helped bring new opportunities to the burgeoning region.

To learn more about the current state of the market and the evolving dynamic between general partners (GPs) and limited partners (LPs), SS&C Intralinks partnered with Private Equity Wire to publish Insights on Latin America’s Alternative Investment Industry 2021.

In this revealing white paper, private equity managers discuss a host of critical topics, including the current fundraising environment, regulatory considerations global firms need to consider before setting up domestic funds, and the need for increased transparency between GPs and LPs.

Industry executives candidly reveal how their firms have responded to the multitude of pressures brought on by the COVID-19 pandemic and how they’ve supported their portfolio companies during this uncertain time.

“The founder and managing partner of our firm has been vocal on having fast, open communication with investors, especially when there’s bad news,” says a spokesperson for a Latin America-based private equity (PE) firm. “Investors appreciate this. We take pride in sharing good news and achievements, but we also focus on the negative developments. Our LPs judge us more on how we deal with difficult situations and protect their capital than necessarily on our successes.” 

While Brazil has maintained a culture of fixed income investing and currently leads the region in terms of activity, a dip in fundraising can be linked to the weakness of the Brazilian real. This has helped fuel pockets of opportunities all across Latin America (LATAM).

“Softbank’s Vision Fund bought into Rappi, an on-demand delivery start-up in Colombia,” says Isabella Muñoz, partner at Mas Equity Partners (MEP) and an active promoter of Colombia’s private equity industry. “We’ve seen an explosion of VC capital investing here over the last year or two. Investors are still conservative, though, so it will take time to build a proper ecosystem for VC investing but it is gaining a lot of traction. There are also lots of opportunities for PE investors in Colombia’s healthcare, agribusiness, food and fast-growing fintech sector.” 

Another key theme among of fund managers is environmental, social and corporate governance (ESG). As the market recovers from COVID-19, they understand that ESG is no longer a “nice to have” for socially conscious and risk-averse investors.

“ESG reporting, in our view, is now a key part of the investment pitch to potential investors,” says Pedro Molina, investment manager at Portland Private Equity. “It has helped us strengthen our relationship with existing investors and some have worked with us in reviewing and improving our ESG program. I think following ESG best practices definitely enhances our dialogue with them.”

Insights on Latin America’s Alternative Investment Industry 2021 is a must-read for anyone involved in LATAM’s private markets. You can download the white paper here.