Brazil’s private equity investment volume plunges 94%
Priscila Rodrigues
Gabriel Reis/Valor
The disclosed value of private equity investments in Brazil plunged 94% in the first half of the year, to about R$900 million from R$13.9 billion in the same period of 2025.
It was the lowest first-half total since the current data series began in 2022, figures from the Brazilian Private Equity and Venture Capital Association (Abvcap), compiled by TTR Data for Valor, show.
The decline, however, needs to be viewed with caution. The values of some transactions completed this year were kept confidential and therefore were not included in the aggregate investment figure. Priscila Rodrigues, president of Abvcap, said the missing information makes it difficult to assess activity based solely on the amount invested.
Deal count also declined, though less sharply. Funds completed 26 investments in the first half, down 26% from 35 in the same period of 2025 and also the lowest first-half figure since 2022.
Exit bottleneck
Difficulty selling portfolio companies remains one of the industry’s main constraints. The survey identified 14 exits in the first half, 12 through sales to strategic buyers and two through transactions with other private equity funds, known as secondary sales. Their combined value was not disclosed.
Gustavo Camargo, partner and head of private equity for South America at Bain & Company, said exit volumes remain below historical levels. With fewer divestments and a large backlog of companies still in portfolios, average holding periods have been increasing.
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That logjam reduces distributions to investors and makes it harder for managers to raise new funds, Camargo said.
Among the first-half deals with disclosed values was a R$50 million investment by Tarpon 10b, Tarpon’s consumer and food investment arm, in dietary-supplement company True Source, Abvcap said.
One potential transaction still in the pipeline this year is Advent and Bain Capital’s proposed acquisition of health-plan operator Amil. If completed, the megadeal would significantly alter the industry’s investment figures.
Despite the small number of completed transactions, funds are reviewing more assets, conducting due diligence and taking part in more sale processes, Camargo said. He added that the second quarter was similar to the first and that dealmaking had not come to a halt.
Greater selectivity
Luiz Octavio Lopes, a partner in the corporate and M&A and capital-markets practices at Lefosse, said the market is showing some signs of recovery but remains highly selective, particularly in traditional private equity.
The main challenge is not a shortage of capital or potential assets but the difficulty of building investment cases capable of delivering returns that adequately compensate for risk.
The combination of weak economic growth, fiscal uncertainty and high real interest rates makes debt more expensive and reduces the benefits of leverage. As a result, Lopes said, value creation must come primarily from factors investors can control, including operational efficiency, margin gains, consolidation and deleveraging.
Infrastructure has proved relatively more resilient because it allows for longer investment horizons and, in some cases, offers predictable, contracted or inflation-protected revenue.
Fundraising constraints have also made managers more selective, Rodrigues said. She believes tighter asset selection and more favorable entry prices could help investments made in 2026 and 2027 generate strong returns.
Exit strategies
The shortage of exits is also shaping investment decisions. Brazil’s stock market has ceased to be a recurring exit route for private equity funds in recent years, Lopes said. Although there are signs that the market could reopen, he believes it is still too early to regard initial public offerings as a predictable option.
As a result, many investment cases now need to be structured from the outset around a private sale, either to a strategic buyer or another financial investor.
“If there are fewer potential buyers and less visibility on the multiples that can be achieved five or seven years from now, investors need to be more disciplined about the price they pay today,” Lopes said.
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Tighter fundraising conditions have also widened the gap between firms. Some managers have succeeded in raising large funds, while others have lost the capacity to make new investments and may shrink or shut down.
Camargo said this consolidation is reducing competition for assets among managers that remain well capitalized.
Secondary market
Lower liquidity has also encouraged the development of Brazil’s private equity secondary market. In these transactions, investors sell stakes in funds or portfolio assets before the vehicles reach maturity, rather than waiting for a conventional sale of the underlying company.
Camargo said the secondary market, which until recently was virtually non-existent in Brazil, has been gaining ground. Rodrigues also sees the current environment as helping the segment develop.
Macro outlook
A more sustained recovery in private equity activity will depend on an improvement in the macroeconomic environment, Lopes said. Greater credibility around the trajectory of Brazil’s public finances could reduce the risk premium and real interest rates while bringing greater stability to the exchange rate.
Currency movements are especially important because some funds investing in Brazil raise capital abroad and must deliver returns in dollars.
A company may expand and generate gains in reais, but a sharp depreciation of the Brazilian currency can erode part of those returns by the time the investment is sold, Rodrigues said.
She does not see the elections themselves as a factor capable of bringing the industry to a standstill. The greater concern is volatility, particularly in the currency market, which could lead a foreign investor to enter Brazil at an unfavorable exchange rate and undermine eventual returns.
Camargo likewise said transaction processes remain underway.
