Investment fund opens new portfolio to harness growth in Brazil

Cayman Islands based Equity Partners Fund SPC has established a new portfolio which will make investments into the growing Brazilian economy.

The new fund, Funchal Equity Partners Fund, aims to tap into economic growth in the South American country. Managers point out that according to the International Monetary Fund, Brazil’s economy expanded by 7.5% last year and is expected to grow by another 4.5% in 2011.

The new segregated portfolio will look to take advantage of some of the significant growth and increased stability the country has experienced in recent years and it has asked Banif Banco de Investimento (Brasil) to conduct valuations of potential transactions and to assist in the hiring of companies that can conduct due diligence should it be required.
 
Funchal Equity Partners Fund generally looks to invest amounts from $50 million up to $500 million in Brazilian listed companies with consistent trading volumes for a variety of activities including working capital, acquisitions and other growth opportunities.

Fund spokesperson Alex Chaia said that the fund will focus on equity investments in public companies as well as private companies that will be listed on a securities exchange within six months of a funding commitment.
 
‘Unlike hedge funds which have significant regulatory burdens exposing their investors to higher risks, Funchal Partners Fund is able to act quickly, is more flexible when it comes to structuring an investment and has less regulatory burdens,’ he said.

‘The fund has no outside investors and is considered a private fund run by its principals, similar to a merchant bank that invests its own capital and as such it is seeking capital appreciation through the identification and funding of liquid growth companies,’ he explained.

‘The fund will approach various companies such as manufacturing, construction, professional services, healthcare and finance who are all looking for growth or acquisition funding which is difficult to find given current global economic conditions,’ he added.
 
The fund’s investment guidelines, apart from a company’s size and liquidity, require them to have exceptional management and long term sustainable growth opportunities with the potential to achieve significant milestones over a developmental period.

‘While applicants should expect to be able to meet our due diligence requirements, our funding arrangements are much simpler than many other avenues such as rights issues and other underwritten issues,’ Chaia said.

‘Ultimately once a company satisfies our requirements we send proposed investment terms and explain the steps required for the company to ultimately obtain the requested funding. In volatile and uncertain equity markets this pre-qualification and pre-agreed funding arrangement is superior in most circumstances,’ he added.