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Laxman Pai, Opalesque Asia: Venture capital (VC) AUM in Latin America was at $9.3 by September 2021, after increasing 15.6% annually over the five years ended 2020 and adding another $3bn over the first nine months of 2021, said a study.
Meanwhile, private equity still stands as the leading asset class, however, with 44% of the region's total AUM, or $25.5bn, said Preqin in its Territory Guide: Latin America 2022.
"Venture capital (VC) is developing in the region as the supply of tech-focused financial and consumer products grows to meet the demand," it said.
Venture capital is quickly catching up, Preqin explained. IT deals dominate the region, concurrent with global trends. This activity has been driven by the labor supply the region offers as well as the demand for mobile access to education, banking, and shopping.
According to the report, rising inflation has hit Latin America (LatAm) particularly hard since the middle of 2021. The most recent Preqin data places Latin America-based alternative AUM at $86bn, less than 1% of total global alternative assets, and an even smaller slice of global gross domestic product (GDP).
Brazil and Mexico saw consumer prices increase by 8.3% and 5.7% in 2021, respectively. Argentina has had high double-digit inflation for the better part of the past decade. These countries, as well as Chile, have raised interest rates to combat this inflation, but the resulting high costs of capital and risk will deter investment, p...................... To view our full article Click here
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