Brazilian online fashion retailer Dafiti said on Tuesday that it would receive $45 million from J.P. Morgan Asset Management in a cash-for-equity deal that underscores investors' appetite for the country's fast-growing Internet market.
The announcement comes less than a month after a fund launched by U.S. firms Redpoint Ventures and e.ventures raised $130 million to invest in Brazilian mobile, media and cloud-service projects.
Dafiti, Brazil's answer to Amazon.com Inc's popular Zappos.com online shoe and fashion store, says it will use the cash to improve logistics, expand into other segments such beauty and home decor, and to bolster recently launched operations in Argentina, Chile, Colombia and Mexico.
"Brazil is still a huge country whose online potential needs to be tapped, and we are very well prepared to do that," Philipp Povel, who created Dafiti in 2011, told Reuters in an interview.
The deal illustrates the potential investors see in Brazil's online retail business, a $10.5 billion market expected to grow 25 percent this year despite a recent slowdown in Latin America's biggest economy.
Venture capital has been steadily flowing into Brazilian startups for the last few years, trying to tap into a market powered by a middle class hungry for consumer goods and with an Internet penetration of just 40 percent, about half that of the United States.
J.P. Morgan Asset Management, a unit of JPMorgan Chase & Co , will take an undisclosed minority stake in Dafiti through a German holding company.
According to a statement released by Dafiti, J.P. Morgan Asset Management managing director Robert Cousin said the Brazilian online retailer should "expand upon their leading market position in the months and years to come."
Created in 2011 with help from the German business incubator Rocket Internet, Dafiti is one of Brazil's leading online fashion retailers with 30 million visits a month.
Malte Horeyseck, another of the company's founders, said Dafiti aimed for a 33 percent to 50 percent share of Brazil's online fashion retail business.
This article is copyrighted by Reuters
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