International private equity fund manager Advent International, which has over $6bn in total under management, has closed its second Latin America focussed fund at $265m. The Latin American Private Equity Fund II (LAPEF II) has closed at a time when many are realising that there are significantly undervalued assets available both in the public and private markets in the region.
The economic and social upheavals in Argentina have helped to precipitate this collapse in valuations and numerous US and international private equity firms are now eagerly examining target companies in the financial services as well as manufacturing, services and consumer sectors in Latin America. LAPEF II will invest primarily in the three Latin American countries where Advent has a direct presence: Mexico, Brazil and Argentina which combined represent 65 per cent of the region's GDP.
Advent says it will use the fund to invest between $10m and $100m in mature, sector leading companies with positive cash-flows across the region. It brings the total capital managed by Advent in the region to approximately $500m.
Advent has already completed its first investment, a $50m buyout of Imagen Fuera de Casa Comunicacion and the operations of Anuncios & Servicios to create the second-largest outdoor advertising company in Mexico.
“We are pleased to have completed this successful fund raising in a very challenging environment,” said Ernest Bachrach, Chief Executive of Advent’s Latin American operations who continued by saying that the firm expected to be able to deliver “attractive returns in a shorter time frame than is normally possible in the region.” The objective is to help nurture local companies for sale to multinational corporations.
Leading investors from North America and Europe committed capital to LAPEF II. The fund received strong support from Advent’s existing limited partners and from major new participants. Investors included GE Capital, HarbourVest Partners, Inter-American Investment Corporation and the International Finance Corporation.
The new fund builds on the experience gained by Advent's inaugural LAPEF I. Formed in 1996 with capital of $225m, LAPEF I invested in 15 companies throughout the region, including: Aero-Boutiques, Mexico’s largest duty-free store chain, floated on the Mexican stock exchange and later acquired by Grupo Areas of Spain; Graffigna, an Argentine wine producer sold to Allied Domecq; and Fumisa, which operates Latin America’s largest airport, the Mexico City International Airport. Fumisa completed an $83m bond offering in December 2001, enabling Advent to deliver a significant equity distribution to its limited partners, while still retaining full ownership of the business.