Currency Impact in Brazilian PE/VC Deals’ Performance

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Autores

Kanitz, Ricardo Vinicius
Bassani, Rafael Honorio
Schittkowski, Pedro Robelo

Orientador

Co-orientadores

Citações na Scopus

Tipo de documento

Artigo Científico

Data

2017

Unidades Organizacionais

Resumo

Brazil is an emerging market that has attracted a lot of private equity (PE) and venture capital (VC) investment in the last 20 years. Foreign exchange rates fluctuated significantly during this period, as in many emerging markets. This article investigates the currency impact on Brazilian PE/VC deal performance during this period. Our main findings are that in the long run, currency risk is irrelevant, but it is substantial at the deal level and, depending on the vintage, also at the fund level. Funds raised in the beginning of a devaluation cycle have their performances significantly deteriorated by currency movements, and the opposite is true for funds raised in the beginning of a currency appreciation cycle. Although there is diversification across deals, depending on the vintage, some funds may not be able to diversify across cycles, and foreign exchange risk may affect funds’ performance and fees and may distort general partners’ track records.

Palavras-chave

Private equity; emerging; portfolio construction; statistical methods

Titulo de periódico

The Journal of Private Equity
DOI

Título de Livro

URL na Scopus

Idioma

Inglês

Notas

Membros da banca

Área do Conhecimento CNPQ

Ciências Exatas e da Terra

Citação

Avaliação

Revisão

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