E-Commerce leader, Merama, announces $225 million round

Less than five months after closing its Series A round, Merama, the leading acquirer and builder of direct-to-consumer businesses in Latin America, has raised an additional $225 million in Series B funding at a valuation of approximately $850 million. The all-equity round was co-led by Advent and SoftBank and is the largest Series B round ever raised in Latin America.

Merama invests in online companies in order to help them operate and scale their business. To date, it has acquired stakes in more than 20 companies operating in Mexico, Brazil, Chile, Peru, Colombia and the United States.

“This new financing from some of the world’s premier investors is a strong affirmation of Merama’s business model, momentum and the size of the market opportunity,” said Sujay Tyle, co-founder and CEO of Merama. (TechCrunch)

Source: eMarketer:

Sling Hub and LABS report highlights the booming Latam venture

Great content from Sling Hub this week with some key data on regional early-stage growth:

  • For over a decade Argentina was the only Latin American country to breed a unicorn company: in 2007, Mercado Libre held the title, and in 2015, Decolar. Until 2017, the two companies were the only unicorns in the region. Skip to 2021: in less than four years, the number of Latin American startups valued at more than $1 billion jumped to 34.
  • Brazil currently has 60% of all Latam unicorns; Argentina is home to 17% and 11% are startups from Mexico. All this data are from the Sling Hub LATAM Report, produced by Brazilian intelligence platform Sling Hub, which looked at stats from 23,383 startups and 656 investors between 2017 and 2021.
  • Total venture capital injected in the region has gone from $2.2 billion in 2017 to $13.1 billion in 2021 –Brazil has taken the lead on this front as well. The country now has 17,987 startups or 77% of the region’s total; next comes Mexico, with 1,869 (8%), and Chile, with 1,109 (5%).
  • Of the 10 startups that have received the most investments in the last five years – together, they have raised $14.1 billion, almost 40% of the total of $36 billion raised in the period –, seven are Brazilian: Nubank ($2.4 billion), C6 Bank ($2.2 billion), Stone ($1.5 billion), Loft ($900 million), Quinto Andar ($700 million), VTEX ($700 million) and Gympass ($700 million). The list is completed by Rappi, from Colombia, with $2.2 billion, Mercado Libre, from Argentina, with $2 billion, and Kavak, from Mexico, with $800 million. (SlingHub, LABS)

Monetary Policy Normalization underway in Latin America

This week Colombia raised rates for the first time in five years. The Andean nation joined Central banks in Brazil, Mexico, Chile and Peru have all been withdrawing stimulus in recent weeks as inflation overshot its target in one country after another. As economies eased measures to curb the pandemic, pent-up demand pushed prices higher, while consumers were also hit by higher global food and energy costs. Brazil’s Central Bank has been most aggressive hiking the Selic rate by 425 bps from a record-low 2% to 6.25%, most recently with a full-point hike. Chile and Peru both raised at each of their last two meetings, with more moves sure to come. The investment team at Integra is watching regional inflation closely and will soon release a white paper on inflation, elections and how this could influence regional venture capital funding. (Bloomberg, Reuters, FT)

Source: World Bank, Macrotrends.com

Thinking of a cross-over fund? GS research reveals key data

Given the continued growth of private assets hedgies are taking notice of the allure encouraging an increasingly significant number of public market investors to “go private”. This is no surprise given the alpha-generating potential of the asset class however there are auxiliary motivations for dipping into private: insights derived from private companies which can inform public investments, better IPO allocations, volatility dampening, and more.

Whether a cyclical or structural phenomenon recent Goldman Sachs research makes the case by highlighting the overall opportunity set. Below a few key takeaways:

  • As a result of this migration of value creation to private markets, hedge funds are increasingly expanding their investment universe to take advantage of this opportunity set. Moreover, investing in privates can be accretive to hedge funds in other ways: the insights gained from private companies can help to inform a public portfolio, as well as ensure allocations to IPOs/secondaries, which in turn can drive performance.
  • Allocator appetite for privates has grown significantly in recent years and there is broader acceptance around hedge funds participating in privates; however, there is a wide variation in views among allocators.
  • Investing in privates is a labor-intensive activity—both in the time that it requires from the investment team, as well as the operational complexity that it can entail, alongside additional demands on the marketing team to be able to raise capital for these investments. That said, the additional level of resource required depends largely on the level of adoption of privates that managers take on.
  • Every manager GS spoke to claims their exposure to privates was a long-term, structural decision, though most emphasized that they will remain predominantly public markets investors. With that said, the small handful of hedge funds that have most successfully embraced privates have arguably become a new type of ‘lifecycle investor’, with the ability to invest with companies through every stage of their growth, which potentially positions them as uniquely-advantaged capital providers. (Goldman Sachs)

Source: Hedge funds, HFR; private equity/other illiquid alternatives (includes private debt, real estate and real assets): Pitchbook; Goldman Sachs analysis. All data as of July 2021 except where otherwise noted.

Source: Manager interviews conducted by Goldman Sachs Prime Insights & Analytics team. All data as of July 2021 except where otherwise noted.

US has plans for Infrastructure spending in Latin America

A delegation of diplomatic and development officials led by President Joe Biden’s Deputy National Security Adviser Daleep Singh is in Colombia, where they plan to meet President Ivan Duque, before stops later in the week to Ecuador and Panama, U.S. officials said.

The group is tasked with turning Build Back Better World (B3W), the international infrastructure investment initiative announced by the Group of Seven richest democracies in June, into reality. It’s the first of several planned “listening tours.”

In addition to meeting with Duque, Ecuadorean President Guillermo Lasso, and Panamanian officials, the trip will allow U.S. officials to speak with the private sector, civil society and “traditionally marginalized groups,” officials said.

The program is focused on areas including climate, health, digital technology and gender equality, officials have said.

A formal U.S. B3W launch event is planned for early next year that will include details of some initial projects aimed at narrowing the $40 trillion needed by developing nations by 2035, according to a senior Biden administration official. It is not yet decided how much capital the program will ultimately allocate. (Reuters)

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