AIG Investments to open Colombia office

The AIG Brazil Special Situations Fund II will put in place a team to pursue investments in Colombia and Peru before the end of the year. Separately, the fund has invested R$60 million in Brazilian engineering services company Advento Participações.

AIG Investments will open an office in Colombia in the last quarter of 2008 to pursue investments in Colombia and Peru from the firm’s second Brazil special situations fund.

The asset management arm of insurance company American International Group (AIG) will put in place a team of two investment professionals plus support staff in the country, where AIG currently has insurance operations, Ana Vigon, head of AIG Investments’ Latin American team, told PEO.

Senior vice president Claudia Arango, who has been at AIG Investments since 1998, will be responsible for the operations. She is currently examining opportunities in the financial services and consumer products sectors, said Vigon.

AIG Investments’ Brazil fund closed on $692 million in April 2008. The fund is to be 70 percent invested in Brazil, according to Vigon. Up to 30 percent of the capital can be deployed in “secondary markets” including Mexico, Colombia, Peru and Chile.

AIG Investments has made one investment in Colombia to date. In March 2007, the Brazil fund invested $38 million in flower distributor Falcon Farms. Arango was responsible for the Falcon Farms investment and currently serves on the company’s board.

“You have small boutiques of locals that have been supporting middle size companies but the markets are very much in an early stage, more than Brazil and even Mexico,” Vigon said of the emerging private equity industries in Colombia and Peru.

The recent ability of local pension funds to invest in private equity has played a big role in developing private equity in Colombia and Peru, said Vigon. Peru’s upgrade to investment grade by US rating agencies in April has also been key to building investor confidence in that country.

The Colombia-based team will also be responsible for investments in Chile if there are any to be found, said Vigon. AIG Investments has not managed to invest in the country to date due to the risk profile of the Chilean market. No investment opportunity within Chile has met the fund’s target IRR of 25 percent.

Separately, the Brazil fund has completed its fourth transaction investing R$60 million ($38.6 million, €27.2 million) in Brazilian engineering services company Advento Participações with the option to invest an additional R$20 million in the future.

In concert with the infusion of capital, Advento will acquire construction company Serpal Engenharia e Construtora. Advento also controls engineering companies Vecotec, Vox and Temar.