Private Equity News & Analysis

EMP completes Mexican telecom exit

The private equity firm’s Latin America Infrastructure Fund has now fully exited Mexican telecom start-up Axtel, following the company’s $345m 2005 IPO.

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EMP Global’s AIG-GE Capital Latin America Infrastucture Fund (LAIF) has completed its exit from its $85.5 million investment in Mexican greenfield company Axtel, more than two years after the company’s $345 million initial public offering on the Mexican stock exchange.

The fund participated in the November 1997 start-up of Axtel, which was awarded a national concession to provide telecommunications services in competition with former monopoly holder Telmex. Axtel bypassed the use of traditional phone lines and instead uses a hybrid local access network based largely on wireless loop technology.

LAIF divested itself of half its initial 15 percent stake as part of Axtel’s IPO in December 2005. The fund then sold another third of the original shareholding in the first half of 2007. Recent direct market sales have allowed the vehicle to complete its exit. Axtel’s share price has increased 120 percent since the company’s listing.

“Axtel faced many obstacles during its early years of growth, but we supported Axtel throughout a critical financial restructuring in early 2003, based on a strong belief in the fundamental business model of the company,” said EMP Latin America managing partner James Martin in a statement. “Judging from the company’s growth and strong appreciation in stock price, this belief has proven to be justified.”

EMP Latin American Management, a joint venture between EMP Global and four members of EMP Global’s Latin American team, is the principal advisor to LAIF. The fully invested fund closed on $1 billion in 1996 and targets equity investments in South America, Mexico, Central America and the Caribbean. Its sponsors are American International Group and GE Capital Corporation, whose combined investments comprise 30 percent of its capital.

EMP managed the day to day operations of the fund during its investment period. Decisions regarding divesture are made by AIG and GE with EMP serving as advisor.

Washington, DC-based EMP Global is an international private equity firm with twelve funds totaling close to $6 billion in capital commitments. The firm’s core competence is in emerging markets infrastructure.