Newbridge to reap 4x on exit in Colombia

Newbridge Andean Partners, a fund managed by ACON Investments and affiliated with Texas Pacific, has agreed to sell its minority stake in Carulla Vivero through a transaction that values the retailer at over $700m including debt.

ACON Investments, a Washington DC-headquartered private equity firm, has agreed to sell its stake in Carulla Vivero to Almacenes Éxito, Colombia’s largest retailer. The transaction values Carulla Vivero – Colombia’s second largest retailer – at more than $700 million (€546.4 million) including debt, according to a press statement issued by ACON today.

The exit is among the larger successes in recent Latin American private equity history. ACON/Newbridge is affiliated with Texas Pacific Group.

The transaction involves first the sale of 77.5 percent of Carulla Vivero’s outstanding shares to Éxito, followed by a delisting of Carulla Vivero from the local stock exchange (Bolsa de Valores de Colombia) and the National Register of Securities and Intermediaries (Registro Nacional de Valores y Intermediarios – RNVI) in Colombia. A group of local investors chose not to cash out in the transaction and will continue to hold a combined 22.5 percent stake in Carulla Vivero.

According to a source familiar with the transaction, ACON is selling its entire 35 percent interest in Carulla Vivero, earning the private equity firm four times its total investment in the retailer. The amounts of ACON’s initial and total investments in Carulla Vivero were not disclosed.

ACON’s investment in what is now Carulla Vivero began in 1998, when the private equity firm acquired a minority stake in Almacenes Vivero through the $160 million Newbridge Andean Partners LP fund. At the time, Vivero was a regional chain of six retail “supercentres”, owned by the local Azout family. A year later, ACON – alongside local investors – further invested in Colombia’s retail sector by acquiring a majority stake in Carulla y Cia., a leading supermarkets chain in Bogotá.

The merging of Vivero and Carulla in 2000 created what is now known as Carulla Vivero, with Sam Azout of the Azout family appointed as chief executive and new management was brought on board the new entity. ACON founding partner Ken Brotman and partner José Miguel Knoell both sit on Carulla Vivero’s board of advisors.

Between 1999 and 2005, Carulla Vivero’s sales rose from $402 million to $877 million, while EBITDA increased from $23 million to $65 million. The retailer’s growth was driven in part by continued consolidation within the sector, including Carulla Vivero’s acquisition of Surtimax, a chain of 20 establishments focused on low-income consumers in Colombia’s urban centres, in 2004.

“We are honoured to have had the opportunity to work so closely with the management of Carulla Vivero over the last several years in what we consider to be a model partnership between a private equity investor and the founding family shareholders of that company,” said Brotman in the press statement. He added, “This sale is a testament to the value of Carulla Vivero’s formats, stores, operations, management and employees, as well as to the overall resurgence of Colombia.”

Upon the completion of the transaction – for which Colombian anti-trust approval is pending – the newly merged entity will operate over 260 retail outlets with combined revenues exceeding $2.4 billion. These outlets include supermarkets, supercentres, hypermarkets, warehouse clubs and convenience stores.

In addition to the Carulla Vivero holding, ACON has also invested in the retail sector elsewhere in Latin America. Last year, the firm acquired Koninklijke Ahold’s GBarbosa Comercial, the seventh largest supermarket retailer in Brazil, for an estimated €90 million. More recently, the ACON-managed $300 million Newbridge Latin America fund cashed out of its investment in Controladora Milano by selling its 100 percent stake in the Mexican discount clothing retailer for $200 million to global buyout firm Advent International.

ACON was founded in 1996 by Ken Brotman, Jonathan Ginns and Bernard Aronson. The firm has managed over $1 billion in private equity funds and special purpose partnerships that invest in the US, Europe and Latin America. In addition to its Washington DC-headquarters, ACON also operates out of its offices in Los Angeles and Madrid.