Currency Impact in Brazilian PE/VC Deals’ Performance

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Autores
Kanitz, Ricardo Vinicius
Bassani, Rafael Honorio
Schittkowski, Pedro Robelo
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Co-orientadores
Tipo de documento
Artigo Científico
Data
2017
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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.

Titulo de periódico
The Journal of Private Equity
Título de Livro
Idioma
Inglês
Notas
Membros da banca
Área do Conhecimento CNPQ
Ciências Exatas e da Terra
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