- The São Paulo firm set a $350 million hard cap for its third vehicle
Stratus Group is aiming to raise $250 million for a new fund focused on investments in Brazil’s middle market, said people familiar with the matter.
The São Paulo investor set a $350 million hard cap for its third vehicle, Stratus Capital Partners III, and plans to close it in October or November, the people said. The cap is more than double the $150 million the firm collected for its current fund in 2014. Stratus’s existing investors have committed about half of the new fund’s target so far, the people added.
The firm intends to close the fund in 2017 to avoid uncertainties that Brazil’s 2018 presidential election may create in the local market, one of the people said. The firm expects up to 70% of the fund’s capital to come from U.S. investors such as family offices and endowments, the person added.
Brunel Advisors, a São Paulo-based placement agent focused on Latin America, is helping Stratus to raise the fund, the people said.
The firm is seeking capital during a time when macroeconomic conditions in Brazil are improving. Declining inflation and signs of economic recovery are boosting private-equity activity in Brazil so far this year after a lukewarm 2016, even though the country remains mired in a political crisis, said industry executives. A strong stock market has led several private equity-sponsored companies to pursue initial public offerings this year, and other firms such as Aqua Capital have seen demand for new funds.
Stratus typically invests $20 million to $75 million—often in more than one tranche—in Brazilian companies operating in industries including health care, financial services, transportation and entertainment, one of the people said.
The firm is about one transaction away from fully committing its current fund, the person said. The fund has backed companies such as movie-theater chain Cinesystem SA, car-fleet management provider Maestro Locadora de Veículos SA, call-center company Flex Contact Center SA and gym operator Just Fit Participações em Empreendimentos SA.
Stratus was founded in 1999 by Álvaro Gonçalves and Alberto Camões, who worked at different times at Banco Pactual, the predecessor of Brazilian investment bank BTG Pactual. The firm closed its first fund in 2002.
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