EMX brings debut fund to $192m

The Mexico City-based firm has raised additional capital for its first fund, which is roughly 30% invested.

Mexico City-based EMX Capital has raised about $62 million of additional capital to invest exclusively in companies in Mexico, bringing the size of EMX Capital Partners I to $192 million. 

Previously The Carlyle Group’s Mexico investment team, EMX spun out in 2009 and raised roughly $124 million for its debut fund in 2011, attracting commitments primarily from Mexican pensions, known as Afores. The $62 million of additional capital comes from European institutional investors, other international limited partners and a small amount of Mexican pensions that re-upped during the second round of fundraising. EMX’s debut fund was placed by Deutsche Bank, as funds in Mexico are required by law to use a placement agent. 

The firm has invested roughly 30 percent of Fund I in two transactions, backing security and logistics provider ILSP and packaging company AG Convertidora. EMX invests in family-owned businesses looking for liquidity, companies in industries that are consolidating, financial restructurings and growth investments. The firm aims to invest between $15 million and $65 million per transaction. 

“We are not in a rush to desperately invest whatever amount of money to just move to the next fund,” EMX senior managing director Joaquin Avila told Private Equity International. “We are strong believers that this is a long-term process in which we need to build up relationships with credible LPs.”

Mexico is in the process of implementing recently passed labour reforms, including the recognition of an hourly wage system rather than the previous monthly wage system and the introduction of seasonal and temporary employment contracts. The country also is reportedly set to announce a banking reform allowing banks to offer credit to small and medium sized businesses at lower costs, legislation that Avila said bodes well for the country’s economic growth prospects. 

“We have started to see a trend that hopefully with the reforms will be accelerated and the opportunities for private equity will increase,” he said. “The reforms of course will take some time to have a significant impact, but I think they are moving in the right direction.”

Mexico Finance Secretary Luis Videgaray told reporters this week that more access to credit for smaller businesses would help increase productivity in Mexico, adding that “we have an encouraging perspective of the changes that may occur and may accelerate the growth outlook in Mexico”.

Prior to co-founding EMX Capital, Avila ran Carlyle Mexico Partners, a $134 million fund raised in 2005.