Private Equity Company Leader Talks Emerging Markets
On March 23, Fernando Gentil, co-founder and co-head of G5 Evercore Private Equity, spoke at Georgetown’s McDonough School of Business about his decision to establish a private equity fund management company in his native country of Brazil. He was hosted by the Stanton Distinguished Leaders Series, which invites renowned leaders to Georgetown’s campus to share their experiences with students, faculty, and alumni, and stayed an additional hour to answer student questions.
Gentil established G5 Evercore Private Equity, which invests in Brazilian technology, health care, and the food retail industries, when he realized that the conditions in Brazil were right for such a company. At the time, inflation was finally under control after years of hyperinflation, the economy was stabilizing, and middle-market, family-owned companies were undercapitalized.
“Suddenly here you had this environment ready for growth, [but] the companies really did not have the capital to take advantage of this upcoming growth,” Gentil said. “So that’s when I decided to go into the private equity business [with a focus on] on middle market companies.”
Gentil and his partners identified 17,000 companies in Brazil with revenue between $30 and 200 million. Because few investment banks are involved in emerging markets, the team established their relationships with these companies themselves. The lack of investment banks and consulting companies in Brazil was beneficial, he said, because deals were much less competitive.
According to Gentil, there are other advantages to investing private equity in emerging markets. First, urbanization is causing people to earn higher wages and thus aspire to better health care and education. It also can diversify an investor’s portfolio and provide better access to the consumer, which is a growing sector in emerging markets. Lastly, it is wise to invest because Gentil estimates that in the next few years, a significant portion of the world’s GDP will be concentrated in emerging markets.
“By 2020, the GDP of the emerging markets will be larger by quite a significant number than the developed markets,” Gentil said.