Martin Escobari is an old acquaintance in the Brazilian entrepreneurial ecosystem. It was through his hands that companies of the caliber of XP Investimentos (), Arco Educação, QuintoAndar and Gympass reached the portfolio of General Atlantic, an American manager that has already made investments in 540 companies around the world.
From the top of the presidency of GA’s global investment committee, Escobari has a privileged view of the back and forth of checks that supply the cash of the most promising companies on the market – as well as the exit doors for those who enter these businesses with great growth potential when they they were nothing more than a bet. His diagnosis for 2025 is simple and straightforward: it will be an exciting year for the private equity.
The starting point is an expected reopening of the IPO window on American stock exchanges. That year, there were around 200 capital openings in the United States – which may seem like a lot in the eyes of Brazilians, but is considered a modest number in the market where there was more than 1,000 in 2021 alone.
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The “hangover” after the euphoria of the pandemic period, when cheap money was eager to have somewhere to be invested, was one of the longest in recent times – three and a half years of the market being closed, beating the then record 18 months recorded by back in the 2000s, in the days of the “dot com” bubble.
“When the market becomes euphoric, IPOs come out from unprepared companies. Then, you understand what didn’t make sense and there’s a bloodletting, people losing money”, summarizes Escobari. It’s a scenario that, at this point, already seems refined.
A election of Donald Trump to the US presidency is another aspect, according to the executive. The vision is that under a republican government there could be both a movement towards deregulation of certain sectors, freeing the industry from its constraints, and greater openness to mergers and acquisitions, leaving behind the restrictive scenario that, according to Escobari, was the reality in the Democratic government.
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With nearly $90 billion under management, GA is one of the companies expected to help fuel a new crop of IPOs. Since the pandemic, the preferred exit route for contributions made in the past has stopped being the stock exchanges and has become the sale of shares to strategic investors. Escobari believes that, with the resumption of capital offerings, the manager will return to a average of 10 to 15 IPOs of investee companies per year.
“There will be liquidity returning to the funds, allowing the private equity invest again”, says Escobari.
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This does not mean that Escobari is standing still on the field waiting for the scenario to materialize and only then taking action. On the contrary. A new wave of GA investments is already underway, and Escobari estimates ending 2024 with contributions of US$7 to US$8 billion – second only to the volumes recorded in the first years of the pandemic.
“We are in the best window to invest in the last 15 years”
According to the executive, companies with the profile desired by GA – with growth of around 40% to 50% per year – can still be purchased at reasonable prices. “For the type of company we like, we have seen interesting opportunities.”
This optimism is being directed towards markets already traditionally accessed by the manager: 50% of the portfolio is made up of American companies, 25% of European companies with global operations and 25% are companies from emerging countries.
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The last group contains the most important changes. The excitement about China has decreased significantly in recent years, and is even more evident now. “The problem is not a lack of stimulus in China, but rather the decoupling [afastamento] between it and the USA”, says Escobari. “It’s uncertainty: will there be a fight or not? How long will it last?”
Who is taking up space among the emerging ones is Indiaaccording to the executive. The reforms established by Prime Minister Narendra Modi brought dynamism to the country and transformed it, if not into the new China, at least into the “ball of the moment”.
O Brazilon the other hand, fell off the radar. “Not ours”, says Escobari, who calls himself the “country’s greatest propagandist in the world”. But it is no longer at the height of the eyes of the world of capital.
“High interest rates with high debt and high taxes are not a good combination. It can only be solved by cutting expenses”
The macro scenario, however, does not speak to aspects of microeconomics – which is “spectacular”, in Escobari’s words. There are good companies with winning strategies doing very well. An example is . The flow of capital towards the country, however, does not help.
Is it possible to change the game? “THE fomo [fear of missing out] it is coming back and it is time for Brazil to enter it, but first it needs to show that it has fiscal policy and spending containment”.
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