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Firms ready to make huge investment in Brazil

Date added: 4th March, 2010 at 09:58
(view all articles from March, 2010)

Categories: Economy

An investment in Brazil as large as $9 billion (£6 billion) could be made by companies looking to capitalise on the booming economy in the country.

With the Latin American nation preparing to host both the football World Cup in 2014 and the Olympic Games in 2016, firms are looking to take advantage of a boost in tourism that will help the economy to grow.

Brazil is already seen as one of the major up and coming economies in the world and is regularly mentioned along with Russia, India and China in the Bric group as an attractive emerging market for investors.

Nick Wollak from Axxon Group, which is considering making an investment in Brazil in the media, health or oil industries, told Bloomberg that companies do not want to miss out on the growth potential of the Latin American country.

"For both multinational strategic investors and private equity firms, Brazil has become a place where you have to have exposure going forward," he commented.

Grupo Santander Brasil and San Francisco-based Paul Capital Partners are among the other companies to have stated that they are considering making an investment in Brazil ahead of the World Cup.

Daniel Sterenberg, a senior associate at private equity firm Carlyle Group, said that his company will make an investment in Brazil of $1.2 billion (£800 million) over the next five years.

The Carlyle Group is said to be considering buying two more Brazilian companies, after it purchased a majority stake in the country's tour operator CVC Brasil Operadora e Agencia de Viagens SA earlier this year.

Goldman Sachs Group chief economist Jim O'Neill stated that growth in Brazil's economy could reach seven per cent this year.

This would outstrip the prediction made by the International Monetary Fund (IMF).

Earlier this year, the IMF predicted that the Brazilian economy would grow by 4.7 per cent in 2010 and a further 3.7 per cent in 2011, which means making an investment in Brazil could be an attractive option for investors.

The group's figures showed that the economy in the South American country was one of the quickest in the world to make it out of recession, as well as being one of the least affected by the financial crisis.

There was only a contraction of 0.4 per cent in the economy during 2009.

Brazil's economy has been protected by discoveries of oil in the country that have helped it to avoid struggling too much in the global financial slowdown.

IMF managing director Dominique Strauss-Kahn commented at the time of the predictions that countries must be careful to avoid coming out of the recession too quickly.

He warned that a fresh downturn in growth could then lead to a double-dip recession. ADNFCR-1477-ID-19649686-ADNFCR