Latin America – the forgotten continent of private capital | Tim Chamberlain, Brunel Partners | Ep. 90
Latin America is largely ignored by European investors, while those from North America and Asia are far more active. Brazil is probably the easiest entry route, combining economic scale, sophisticated domestic family capital and significant opportunities in sectors. However, success requires thematic focus, patient capital, strong local relationships and a disciplined approach to currency risk.
In this episode of Fund Shack, Ross Butler speaks with Tim Chamberlain of Brunel Partners, a Brazil-based placement and advisory firm connecting local managers and entrepreneurs with global institutional capital.
The conversation explores why international allocations to Latin America remain low, where private capital is already finding opportunity, and what Brazil can teach investors about operating in markets shaped by capital scarcity, political uncertainty and economic volatility.
What are the key takeaways?
- Brazil offers scale that is difficult to find elsewhere in Latin America, with a large domestic economy, established capital markets and a broad base of investable businesses and assets.
- The strongest investment cases tend to be thematic rather than generalist, including agriculture, critical minerals, infrastructure, distressed situations and selected private credit strategies.
- Capital scarcity can create attractive entry points, particularly for investors able to provide flexible finance when local banks and conventional capital markets are constrained.
- Currency risk remains one of the biggest barriers for international investors, although the underlying exposure of an asset may differ materially from the currency in which a fund is denominated.
- Local networks matter enormously. Investors need partners who understand the legal system, corporate landscape, political environment and sources of deal flow.
Why has international investment in Latin America remained limited?
International institutional interest in Latin America remains low relative to the size and economic potential of the region.
Tim argues that most international interest currently comes from North America, with selective Asian capital pursuing strategically important assets such as:
- Critical minerals
- Ports and transport infrastructure
- Toll-road concessions
- Energy assets
- Data centres
- Agricultural supply chains
European investors have historically paid less attention to the region. Capital flows often follow established commercial, linguistic and historical relationships, while London, Paris and Frankfurt remain focused on markets closer to home.
Latin America must also compete against powerful global investment themes. Every allocation to the region is capital that cannot simultaneously be committed to artificial intelligence, US technology or another established institutional priority.
The result is a market where interest may be understated relative to the underlying opportunity.
Which private equity strategies appear most attractive?
A broad, generalist Latin America growth equity proposition can be difficult to take through an institutional investment committee.
The more compelling opportunities tend to be focused and thematic.
Agriculture
Brazil is one of the world’s most important agricultural producers and exporters. Its scale, climate and ability to produce multiple harvests create opportunities across farmland, agricultural technology, logistics, processing and finance.
Some agricultural businesses also generate revenues linked to US dollars or international commodity prices. This can make their underlying economic exposure different from that of a purely domestic Brazilian business.
Critical minerals
Brazil holds substantial reserves of minerals required for batteries, industrial alloys and the global technology build-out.
The episode discusses niobium, a mineral used in specialist alloys and some battery applications, as an example of an area attracting private capital interest.
Early-stage mineral development can be difficult to finance through conventional markets. Private funds may provide the capital required for exploration, geological work, permitting and the development of proven reserves before a strategic or industrial buyer becomes involved.
Infrastructure
Brazil continues to expand ports, toll roads and other essential infrastructure.
These assets can appeal to international investors because they are often supported by long-term concessions, identifiable cash flows and essential economic demand.
Infrastructure investment also connects with geopolitical interest in transport networks, export capacity, energy security and critical supply chains.
Distressed and special situations
Tim argues that Brazil can be particularly attractive for experienced distressed investors.
The underlying opportunity may not be a failing business. It may be a fundamentally sound company trapped inside a poor capital structure, shareholder dispute or complex set of creditor relationships.
An investor able to provide fresh capital and negotiate with banks, shareholders and other stakeholders may acquire a strong position at a substantial discount.
Rather than relying primarily on macroeconomic growth or multiple expansion, returns can be created through restructuring the situation at the point of entry.
Is private credit becoming more important in Brazil?
Brazil’s high domestic interest rates give local investors a strong incentive to hold government bonds. They also raise the hurdle that private investments must overcome.
At the same time, high rates and conservative bank lending can leave many middle-market businesses without suitable financing.
This creates an opportunity for private credit funds that can:
- Underwrite individual borrowers
- Accept greater complexity
- Structure loans around specific cash flows
- Finance agricultural receivables
- Lend below the largest and safest corporate credits
The episode discusses FIAGRO, a Brazilian investment structure designed to channel capital into agricultural assets and receivables.
Local investors are already participating in these strategies. International interest is also growing, although Tim suggests that the market may still need more suitable vehicles before foreign allocations accelerate materially.
How can investors approach currency risk?
Currency risk is one of the most misunderstood aspects of investing in Latin America.
International investors often assume that any underlying return will eventually be lost through depreciation of the local currency. The cost of hedging can also be extremely high because it reflects the interest-rate differential between Brazil and markets such as the United States.
Tim argues that investors should look beyond the denomination of the fund and examine the economic exposure of the underlying assets.
A Brazilian business may generate revenue from:
- International commodities
- Agricultural exports
- Dollar-linked contracts
- Global customers
- Infrastructure concessions with inflation protection
A fund denominated in Brazilian reais may therefore contain assets with meaningful dollar-linked or internationally diversified revenue streams.
The decision should not simply be whether to accept or hedge the Brazilian real. Investors need to understand how currency risk operates at the asset level.
Who provides domestic institutional capital?
The institutional capital base differs considerably across Latin America.
Pension funds in Chile, Peru, Colombia and Mexico tend to be more internationally oriented. Major global private markets firms regularly travel to the region to raise capital from these institutions.
Brazilian pension funds are much more domestically focused.
One reason is the return available from inflation-linked Brazilian government bonds. Pension funds can often meet their actuarial targets without accepting the complexity, illiquidity or currency exposure associated with international private markets.
By contrast, family offices are central to Brazil’s private capital ecosystem.
Many Brazilian family offices have sophisticated international networks and allocate across local and global opportunities. They attend international private markets conferences, exchange ideas with global investors and seek exposure to dollars and euros alongside their domestic investments.
What are precatórios?
One of the more unusual opportunities discussed in the episode is the market for precatórios.
A precatório is a court-ordered payment owed by a Brazilian public authority after the claimant has won the underlying legal case.
The legal merit may already have been settled, but the timing of payment can remain uncertain. Claimants who have spent years pursuing a case may prefer to sell the payment right rather than wait.
Specialist investors can acquire these claims at a discount and receive the eventual payment from the government.
As Ross observes in the conversation, the strategy effectively involves securitising inefficiencies in the judicial payment system.
The opportunity can be attractive when capital is scarce. However, expected returns decline when too much investment capital begins chasing the same claims.
Could Brazil benefit from AI and the energy transition?
Brazil’s long-term investment case is connected to several of the world’s most important structural themes.
The country has substantial renewable energy resources, including hydroelectric, wind and solar generation. This could support the development of energy-intensive infrastructure such as data centres.
Brazil also has significant agricultural capacity and mineral resources required for electrification, batteries, industrial production and technological infrastructure.
The bull case is not that Brazil will become politically or economically predictable.
It is that the country possesses many of the physical resources, energy advantages and productive assets required by the next phase of the global economy.
Private capital may be well placed to connect those resources with international investors.
What is the most sensible entry strategy?
Tim’s advice to a new international investor is pragmatic: start small and build local knowledge.
The appropriate allocation depends on:
- The quality of the investor’s local network
- Access to managers and direct opportunities
- Understanding of individual sectors
- Currency and liquidity requirements
- The ability to invest across multiple vintages
- The investor’s tolerance for political and economic volatility
A small initial allocation can help an institution develop relationships, learn how the market operates and identify which managers have genuinely differentiated access.
Brazil is Tim’s preferred starting point within the region because of its scale, institutions and market structure.
The opportunity should not be treated as a single top-down bet on Latin America. It is better approached as a collection of specific companies, assets, sectors and financing situations.
About Tim Chamberlain
Tim Chamberlain is based in São Paulo and works with Brunel Partners, a placement and advisory firm connecting Latin American managers, entrepreneurs and investment opportunities with global institutional capital.
Tim began his career in Asia, working in Hong Kong before joining Eurekahedge in 2002 and later opening its New York office. He moved to Brazil in 2010 and helped establish Brunel Partners in 2014.
His work spans international fundraising, local manager access, family offices, private market transactions and cross-border investment between Latin America and global capital markets.
About Ross Butler
Ross Butler is the host of Fund Shack and the author of Invest Like a Barbarian: Share in the Spoils of a Private Markets Revolution.
He has spent more than 25 years working across private capital as a journalist, policy adviser and consultant. His previous roles include Editor of Real Deals, Secretary of the EVCA Professional Standards Committee and Director of the Listed Private Capital Association.