“Is Brazil expensive?” Yes, says Antonio Bonchristiano, co-president of private equity firm GP Investimentos. Despite his findings, he says “Brazil holds good business opportunities“. According to him, issues such as high taxes, bureaucracy and high interest rates make Brazilian assets pretty expensive. But he adds: “Brazil is not what you read in the Financial Times.”

His rationale…

The executive emphasizes that consumption, which represents 60% of GDP is far above countries such as China. He also said that the rising income of the middle class (105 million people) combined with the housing deficit (estimated at seven million), also offers growth opportunities for companies.

Prices went up…

The country has recently attracted billions in funding from private equity investments, making the market crowded and inflating asset prices. He also tries to keep a distance from investment banks: “We avoid entering an auction.”

Entering the real estate market… somewhat late, perhaps?

GP has recently created a division for real estate investments, an area viewed with suspicion by the market. “Sure, if you look at prices in the Avenida Vieira Souto area, the values ​​are undoubtedly high, but you don’t need to buy there,” he says, adding that Brazil has 80 cities with over 300,000 inhabitants.

Capturing money for his PE fund…

It was found out that GP is in the process of raising a real estate fund. The portfolio must be comprised of real estate assets, not shares in companies.

Our view…

Talking things up (like saying that real estate is a good investment now) is what a salesman does, we get that. But, if it is expensive, it must also be intuitive that buying assets at inflated prices would not benefit investors… though GP will still get its 2% management fee.

Food for thought…

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