Advent consolidates six Latin American portfolio companies

The Boston-based private equity firm has acquired Brazilian highway restaurant chain Frango Assado which will become part of the largest casual dining group in Latin America.

Advent International has acquired its sixth Latin American restaurant chain, Frango Assado, which will join five other companies in Advent’s portfolio as part of newly formed casual dining platform International Meal Company.

The Brazilian highway restaurant chain was acquired from its founding families for an undisclosed amount. Frango Assado operates 12 restaurants and retail stores located along São Paulo’s most traveled roadways.

Advent was attracted to the chain due to its favorable brand image, consumer loyalty, size and strong same-store sales growth, São Paulo-based managing director Martín Escobari told PEO.

It's almost a real estate play.

Martin Escobari

Frango Assado will become part of International Meal Company, the platform Advent has created to hold its Latin American restaurant investments. Frango Assado is joined by: Brazilian casual dining chain Viena, Brazilian airport restaurant operator Grupo RA, Mexican casual dining chain La Mansion, Mexico-based French bistro chain Champs Elysees and Puerto Rican airport restaurant and in-flight catering company IMC Caribe.

Following the consolidation, International Meal Company will be the largest casual dining group in Latin America.

“There are tremendous synergies in sharing back office and joint procurement,” said Escobari. Advent previously integrated Brazilian chains Viena and RA resulting in 15 percent EBITDA growth solely from savings resulting from consolidation. Escobari expects a similar result from the creation of International Meal Company.

Advent has pursued the casual dining sector in Latin America because it is fragmented, not professionally run and is in a position to benefit from the continent-wide rise of the middle class, said Escobari.

“We’re choosing strategies and companies that have premium locations so it’s almost a real estate play,” said Escobari, highlighting high-traffic airports, shopping malls and highways as prime locations.

In addition to acquisitions, Advent is pursuing aggressive organic growth, said Escobari. For example, Viena had 30 stores at the time of its acquisition and will open 51 new locations this year. Frango Assado has been opening one store per year, a target that Advent will increase to three.

In regards to the global economic turndown, Escobari said: “I don’t think [Latin America] will be 100 percent immune but so far we haven’t seen any impact and we don’t think that the impact will be very severe.”

Mexico will be more affected by the global economy than the rest of Latin America as the result of its ties to the US, according to Escobari. Escobari expects approximately three years of slower growth in the country but does not expect the economy to contract.

Boston, Massachusetts-based private equity firm Advent has raised more than $24 billion (€16.4 billion) in capital. The firm’s fourth Latin America fund closed on $1.3 billion in July 2007. Advent this month closed its Japan Private Equity Fund on ¥60 billion. In April, the firm closed its most recent global fund on €6.6 billion and its fourth Central and Eastern Europe fund on €1 billion.