There's a fascinating story from the NY Times DealBook that highlights some of the risks that private equity investors face when doing business in South America. Add jail to the list. In "An Airline Investment in Uruguay Becomes a Catch-22" the unhappy story of a Latin American private equity firm Leadgate and its founders is recounted. The firm acquired a majority interest in the troubled airline, Pluna, that was Uruguay's national airline. After restructuring the airline and making operational improvements, a perfect storm of politics, litigation, surging fuel prices and a volcanic eruption sent the airline into a downward spiral. After unsuccessfully trying to raise capital, the private equity firm transferred its ownership to the Uruguay government.
Unfortunately for the principals of the PE firm, they were all later detained and one of them has remained in prison for several years, without any charges filed.
It's a remarkable cautionary tale about private equity investing in South America.
Link:
http://www.nytimes.com/2015/05/15/business/dealbook/risky-web-of-privatization-in-uruguay-where-charges-are-optional.html?ref=dealbook
Unfortunately for the principals of the PE firm, they were all later detained and one of them has remained in prison for several years, without any charges filed.
It's a remarkable cautionary tale about private equity investing in South America.
Link:
http://www.nytimes.com/2015/05/15/business/dealbook/risky-web-of-privatization-in-uruguay-where-charges-are-optional.html?ref=dealbook
