CPPIB and Goldman back $950m Peruvian fund restructuring

The deal, which involves three of the Peruvian private equity firm's existing funds, is understood to be the largest GP-led transaction to come out of Latin America.

Canada Pension Plan Investment Board and Goldman Sachs Asset Management have emerged as the buyers in the GP-led process involving Peru’s Enfoca Investments, four months after sister publication Secondaries Investor first reported on the process.

The two buyers backed a deal totalling $950 million in capital commitments to purchase limited partnership stakes in three of the Latin American private equity firm’s existing funds, according to a statement from Enfoca. CPPIB committed $380 million of the total.

“Through this transaction, CPPIB will gain further access to this growing market and increase its overall investment in Latin America, one of our strategic focus regions,” Michael Woolhouse, CPPIB’s head of secondaries and co-investments, said.

The deal, which involves consumer-oriented companies, is understood to be the largest GP-led transaction to come out of a region that has little secondaries activity. In November Altamar Private Equity‘s Latin America head told Secondaries Investor the success rate of GP-led deals involving private equity funds in the region was likely to be low. Overpricing in light of political and exchange-rate risk as well as the continent’s relatively short history of successful exits make closing deals there challenging, managing director Alvaro Gonzalez said.

It is not clear if LPs were given the option to remain in the vehicles or were forced to sell or roll over into the new vehicle.

The new vehicle has an eight-year term, according to a source familiar with the fund.

The tender offer gave LPs “attractive returns” on their original investments, the statement noted, and Enfoca did not disclose the exact figure.

Peru’s three largest pension funds – Integra, Prima and Profuturo – sold parts of their stakes in the three funds and contributed fresh capital to the new vehicle, the statement noted.

Park Hill advised on the deal.

Secondaries Investor reported in September that the Lima-headquartered firm wanted to give more runway to investors in its funds, which aim to tap into high-growth sectors that are benefiting from the rise of Peru’s middle class.

The firm’s debut buyout fund Enfoca Descubridor 1 raised 693 million Peruvian soles ($215 million; €176 million) by final close in March 2011, making it Peru’s largest ever investment fund.

Enfoca Discovery 1, a US dollar-denominated fund aimed at global development banks, funds of funds and regional family offices, closed in 2011 on $158 million.

The other fund involved in the restructuring, Enfoca Descubridor 2, raised 152 million Peruvian soles, hitting final close in 2013.

Enfoca has made one exit since inception, divesting a controlling stake in hardware retailer Maestro in September 2014 as part of its $420 million sale to Chilean rival Sodimac. The deal generated a 20 percent internal rate of return, according to a source familiar with the transaction.