Brazil’s Spectra to double FoF firepower as LP stakes rise

Spectra Investments is seeking around $200m for its fourth fund and will allocate about 40% to secondaries.

Spectra Investments, a Brazilian fund of funds, is aiming to double its buying firepower with its latest fund of funds due to a greater opportunity for LP stakes.

The São Paulo-headquartered firm is seeking 800 million real ($206 million; €182million) for Spectra Latin America Private Equity Fund IV and has already raised around 650 million real, founding partner Ricardo Kanitz told Secondaries Investor.

The firm’s 2014-vintage Fund III raised around $100 million, according to PEI data.

Fund IV aims to invest around 40 percent in secondaries, 40 percent in primaries and 20 percent in co-investments. Fund III targeted a similar split.

“We are seeing a greater opportunity set for portfolios of LP stakes,” Kanitz said. “These are larger transactions that require we have a greater bite size.” The firm is also creating sidecars from its LPs to add additional capital to bid for such deals, he added.

Spectra aims to hold the final close on Fund IV before the end of the year, Kanitz said.

The fund has so far collected capital from Brazilian pension funds as well as global and domestic family offices, endowments and private banks.

In a Q&A with Secondaries Investor last year Kanitz said Spectra acquired LP stakes at an average discount to net asset value of 41 percent over previous three years.

Brazil offers the best opportunities and most steady dealflow in Latin America, he said. Two drivers of this are local pension funds which have decided to dispose part or all of their illiquid assets due to poor performance, and funds reaching their 10th-12th years that could be restructuring candidates.