Amena suspends VC investment

The Spanish mobile operator is to carry out a strategy review for its E60m venture fund after new investment opportunities have dried up.

The venture capital arm of Amena Retevisión Móvil, the Spanish mobile operator owned by Auna Group, has effectively suspended new investment as deal flow has dried up. 

The E60m ITFCR Fund (Inversiones en Telecomunicaciones Fondo de Capital Riesgo) was set up in 1999, with 66 per cent of the capital provided by Amena and 34 per cent by the European Investment Bank.

The TMT fund was established as part of the licensing agreement for Amena's mobile phone business. Amena launched the fund as part of its bid for an operating license which was awarded by the Spanish Ministry of Science and Technology following a beauty contest. To date the fund's investments total E21m.

The fund was to be run on a commercial basis, whilst also intended to generate social benefits. 'The main objective of the fund we run is for it to be as profitable as it could possibly be. Therefore it is our duty to verify the feasibility of each investment opportunity,' explained Guillermo Ramos, head of the venture capital unit.

Ramos and his colleague, Pablo Gomez, were brought in during the first half of 2001 to take over from the previous investment team which had left after having completed three deals. By the time Ramos and Gomez came in, ITFCR was already invested in Mundoviaje.com, an online retailer for package holidays, which according to Ramos is 'probably the market leader in Spain in its sector. The problem is that the sector isn't very big.'

ITFCR had also invested in Kelkoo.com, a portal which sources leads for online shoppers and Safelayer, a software development company specialising in security applications. Since coming on board Ramos and Gomez have done one more deal, an invesment in MolinarE, a digital post production company, in August 2001.

Since then several due diligence processes have failed to yield results. 'Last year owners were still naming very high prices. It was difficult to make them understand that the market had changed,' said Pablo Gomez, a projects analyst. 'There were a number of deals we would have liked to sign, but we just didn't see the returns to justify the prices being asked. The distance between the two parties was considerable.'

As a result, the decision has been taken to effectively suspend investments while the company reviews its approach. It seems likely that the fund's exclusive focus on the new economy will be one of the areas coming under scrutiny.