Jose, really well put together piece. The 7% of global GDP vs. under 2% of global PE capital stat is wild, and honestly the kind of number that makes you question whether the conventional wisdom on LatAm has just been copy-pasted for the last two decades without anyone actually stress-testing it. The commodity angle is hard to argue with too, copper and lithium aren't going anywhere, and the world is going to need both at a scale that doesn't have many alternatives outside the region.
One thing I kept thinking about while reading: you mention that no PE-backed company in Brazil has managed to list since 2021 and that exit markets are thin across the board. Given that, how are the funds actually deploying into the region structuring their timelines and return expectations? Are LPs underwriting longer hold periods from the jump, or is the assumption that exit windows will open back up before they need liquidity?
Hey Christian, appreciate you reading it closely enough to ask the hard question.
The short answer is: the better funds are underwriting longer holds from the jump, not banking on a window opening on their timeline. The data is pretty clear on this, globally, average PE hold periods hit 8.5 years in 2024 (vs. 4.1 years in 2007), and in LatAm specifically the problem is more acute because you have thin IPO markets and very limited secondary transaction volume layered on top of that. In fact, the only PE-backed IPOs in the region since early 2024 were Auna (Peru) and Tiendas BBB (Mexico), both listed on the NYSE, not even on local exchanges, which says a lot about where the liquidity actually lives.
What’s interesting is how the smart money is adapting. A few things are happening in parallel:
1) Sponsor-to-sponsor sales are becoming the dominant exit route, essentially passing assets between PE firms rather than relying on public markets.
2) There’s a real migration toward private credit structures, where LPs get contractual cash flows and shorter durations instead of equity upside with uncertain exit timing.
3) Continuation funds are being used more creatively to extend hold periods without forcing a fire sale.
So, to directly answer your question, it’s less “LPs are betting exit windows reopen” and more “the funds raising money right now are structuring expectations around 10+ year timelines and building exit optionality across multiple channels rather than relying on one.” The LPs willing to accept that are increasingly being compensated with entry multiples you just can’t find in developed markets anymore.
Jose, really well put together piece. The 7% of global GDP vs. under 2% of global PE capital stat is wild, and honestly the kind of number that makes you question whether the conventional wisdom on LatAm has just been copy-pasted for the last two decades without anyone actually stress-testing it. The commodity angle is hard to argue with too, copper and lithium aren't going anywhere, and the world is going to need both at a scale that doesn't have many alternatives outside the region.
One thing I kept thinking about while reading: you mention that no PE-backed company in Brazil has managed to list since 2021 and that exit markets are thin across the board. Given that, how are the funds actually deploying into the region structuring their timelines and return expectations? Are LPs underwriting longer hold periods from the jump, or is the assumption that exit windows will open back up before they need liquidity?
Hey Christian, appreciate you reading it closely enough to ask the hard question.
The short answer is: the better funds are underwriting longer holds from the jump, not banking on a window opening on their timeline. The data is pretty clear on this, globally, average PE hold periods hit 8.5 years in 2024 (vs. 4.1 years in 2007), and in LatAm specifically the problem is more acute because you have thin IPO markets and very limited secondary transaction volume layered on top of that. In fact, the only PE-backed IPOs in the region since early 2024 were Auna (Peru) and Tiendas BBB (Mexico), both listed on the NYSE, not even on local exchanges, which says a lot about where the liquidity actually lives.
What’s interesting is how the smart money is adapting. A few things are happening in parallel:
1) Sponsor-to-sponsor sales are becoming the dominant exit route, essentially passing assets between PE firms rather than relying on public markets.
2) There’s a real migration toward private credit structures, where LPs get contractual cash flows and shorter durations instead of equity upside with uncertain exit timing.
3) Continuation funds are being used more creatively to extend hold periods without forcing a fire sale.
So, to directly answer your question, it’s less “LPs are betting exit windows reopen” and more “the funds raising money right now are structuring expectations around 10+ year timelines and building exit optionality across multiple channels rather than relying on one.” The LPs willing to accept that are increasingly being compensated with entry multiples you just can’t find in developed markets anymore.