Private Equity Potential in Latin America

Extracted 29NOV2011 from

Impressively fast growth in the Latin American IT services market is drawing interest from both local and global private equity investors. Claudio Muruzabal, CEO of global business/IT consulting firm Neoris, says this trend will likely accelerate in the near future. “Depending on which statistics you look at, the Latin American IT services market is growing at twice the speed of the global IT services market,” said Muruzabal. “Per se, it is a bigger opportunity in terms of growth.”

Muruzabal said some of this activity has been driven by Latin American companies getting acquired by private equity funds and then consolidating other Latin American businesses, and some has been driven by outright acquisitions. In addition, he said there has been an increase in IPOs from Latin American IT service providers in the last year or so.

According to Muruzabal, private equity investors are targeting both IT service providers which specialize in one specific Latin American country and ones with regional or super-regional markets. “Latin American private equity funds are tending to go after single-country, lower-end providers,” he said. “Larger regional and super-regional players are drawing a lot of attention both from private equity funds and the strategic buyer market.”

In addition to offering entry into the larger Latin American markets, such as Brazil, Muruzabal said regional and super-regional IT service providers based in the region also offer a stronghold for companies looking to enter the growing Nearshore services market serving the US and Europe.