Brazil retailer Dafiti secures $70 million from Canadian fund

Tue Sep 17, 2013 7:01am EDT
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By Esteban Israel

SAO PAULO, Sept 17 (Reuters) - Online fashion retailer Dafiti said on Tuesday it will receive $70 million from Canada's Ontario Teachers Pension Plan, in a cash-for-equity transaction that shows resilient investor interest in e-commerce in Brazil.

The investment, which comes as sluggish growth and inflation give some investors pause in Latin America's biggest economy, follows heavy interest by foreign investors in recent years in the country's $10 billion e-commerce market.

Despite the slowdown, many internet companies, venture capital groups and other investors believe the market will grow rapidly in a country with relatively low Internet penetration.

In a statement, Wayne Kozun, a senior vice president at Teachers,' as the pension fund is known, cited "a growing middle class, huge consumption potential and significant growth in online and mobile access" as reasons for the Dafiti investment.

Dafiti, Brazil's answer to Zappos, the popular shoe and fashion retailer owned by Amazon, is undeterred by high inflation, soaring household debt and the other economic woes that could crimp consumer sentiment.

Brazil's economy, fueled in part by soaring consumer demand during a decade-long boom, is expected to grow by little more than 2 percent this year, compared with the 7.5 percent growth posted in 2010.

"When we look at Brazil, we don't think only of GDP growth, but also a middle class and disposable income that continue to grow," Philipp Povel, one of Dafiti's founders, said in an interview.

Most encouraging is online potential, he added.   Continued...