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Advent enters Brazilian credit markets with R$360m deal

The global mid-market firm has done Brazil’s biggest private equity deal this year with the purchase of a 30% stake in CETIP, the largest central depository for private fixed income securities and over-the-counter derivatives in Latin America.

Advent International’s 10th Latin American financial services deal – the purchase of a minority stake in Latin America’s largest central depository for private fixed income securities and over-the-counter (OTC) derivatives – puts the firm in position to capitalise on projected growth in Brazil’s credit markets.

 

“On a global scale, Brazil is the only large market that is still under-leveraged and is likely to see higher-than-average credit growth in the near future,” Martín Escobari, a managing director in Advent’s São Paulo office, said in a statement. Advent said the average net debt-to-EBITDA ratio of approximately 0.7x in 2008 illustrates the likelihood for increased issuance of corporate fixed income securities. 

 

Brazil is the only large market that is still under-leveraged and is likely to see higher-than-average credit growth.

Martin Escobari

Advent paid roughly R$360 million ($171 million) for a 30 percent stake in CETIP, or Balcão Organizado de Ativos e Derivativos. The investment was approved by Brazilian regulators but the total amount Advent will invest from its $1.3 billion Latin American Private Equity Fund IV is subject to conditions including an earn-out achievement.

 

CETIP – which has assets under management of R$2.6 trillion and averages daily trading volume of more than R$50 billion – was established in 1986 as a mutual-owned non-profit organisation by entities including the Central Bank of Brazil. It was de-mutualised in June 2008.

 

Jointly led by Advent’s Latin American and global financial services teams, the CETIP transaction marks its 10th financial services deal in Latin America and its third deal in Brazil since September.

 

CETIP also represents Advent’s third portfolio company focused on the fixed income and OTC derivatives sectors. It has previously invested in US fixed income trading platform BondDesk Group and Nasdaq-listed OTC derivatives broker GFI Group.

  Advent was recently voted best Latin American private equity firm for the fourth year in a row in the Private Equity International Awards.