Carlyle invests $250m in debut Brazilian buyout

Adding to the private equity momentum in Latin America’s largest economy, the firm will buy a majority stake in CVC Brasil, a major tour and travel company based in Santo Andre.

The Carlyle Group today unveiled details of its first buyout in Brazil – a 63.6 percent state in CVC Brasil Operadora e Agencia de Viagens, a major operator of tours and travel services in Brazil and throughout Latin America.

A source close to the transaction said that Carlyle agreed to invest $250 million in the company.
Equity for the deal came from Carlyle’s $13.7 billion US buyout fund, and the firm’s South America Buyout Fund, which held a first close last year. A spokesperson declined to provide details about the fund.

The value of the transaction was not disclosed. Joining the deal as co-investors are CVC chairman Guilherme Paulus and RJR Equity Partners. Paulus will remain chairman of the company.
Included in the deal is the cruise ship business operated by CVC. Not included are Paulus’ interests in airline WebJet, hotel management company GJP and advertising agency GP7.
The investment was led from Sao Paulo by Fernando Borges, managing director and head of Carlyle’s South America buyout team. He joined Carlyle last year from what was formerly named AIG Capital Partners. The new portfolio company will be supported by Carlyle’s consumer and retail team, led by Sandra Horbach, a former Forstmann Little executive.

According to a statement announcing the investment, CVC is expected to see growth partly as a result of the planned 2014 FIFA World Cup and 2016 Summer Olympics to be held in Brazil.
CVC, based in Santo Andre, was founded in 1973. The company claims to be “the largest tour operator in Latin America”.
In an interview with PEO's sister publication Private Equity International magazine published late last year, Borges was bullish on the development of the private equity industry in Brazil. He said: “I think the market is very attractive; it is growing, stable. There are many sectors that need money and we’re going see good deal flow. The level of activity we’ll see over the next five years will be totally different than what we saw over the past five years.”

Carlyle has previously invested in Brazil, but not in traditional private equity deals. The firm’s South American real estate team made investments in the country, but that platform has been wound down.

The firm, together with affiliated energy specialist Riverstone Holdings, agreed to invest $240 million in Brazilian ethanol and sugar producer Companhia Nacional de Acucar e Alcool in 2007.