Introduction:
This case describes the business environment in Brazil circa 2011 as seen from the eyes
of a foreign private equity (PE) firm, in this case the technology-focused Silver Lake Partners.
Between 2003 and 2010, investor enthusiasm about the prospects of Brazils consumer market
attracted some of the biggest PE firms to open shop in Brazil (e.g., Carlyle, Warburg Pincus,
General Atlantic). Silver Lake itself closed two deals in Brazil before the summer of 2011. Now
they need to consider whether it makes sense to open shop in Sao Paulo.
The case is comprehensive, covering the macroeconomic environment, the challenges of
doing business in Brazil, the recent rise of almost 40 million people to the middle class in Brazil,
and the entry strategies of foreign PE firms into Brazil. It then turns into a detailed discussion of
the strategy of Silver Lake. As such, the case describes in detail the risks and opportunities of the
Brazilian market on three levels: at the macro level, at the industry level (in this case, the
technology sector), and for private equity in particular. In preparing for this case, try to think
about opportunities and risks on all three levels.
Please do these questions and turn them in on Canvas before the start of class. Come
to class ready to discuss.
Questions:
Please write no more than a paragraph for each question. Bullet points or a chart is fine too.
1. What structural changes over the period 2003 to 2010 make investing in Brazil more
promising than in the past? What are some reasons for concern going forward? Is the
boom in Brazil for real this time (as of 2011), or can the country go bust again?
2. Do some internet research on the tech sector in Brazil. Whats happening in the industry?
What are some companies, both established companies and start-ups? What strategies
allow them to succeed in Brazil?