Baring Latin America Partners announced Thursday that it had been selected by the Overseas Private Investment Corporation (OPIC) to manage a new private equity fund in Mexico.
The OPIC board of directors has approved $60 million (€45 million) in financing for the Baring Mexico Private Equity Fund II. The fund has a target of between $150 and $200 million and seeks to find middle-market opportunities in Mexico’s developing economy.
Varel Freeman, managing partner at Baring, said Mexico’s proximity to the US, young demographics, steady economy and increasingly democratic behaviour all make the country ripe for investment.
“You’ve got an economy in which people can afford to save,” Freeman said. “This is a serious economy with consumption and demand.”
Freeman added that even as the nation’s economy matures, the benefits of Mexican investments are unrecognized as so much emerging-market capital flow to China.
“Mexico is an environment that attracts the usual class of investors,” he said. “It will also attract some European money, particularly Spain.”
In 1996, Baring raised a previous Mexican fund, which is now fully invested. That fund raised $47 million.
Baring also has offices in Mexico City, Mexico and São Paulo, Brazil.
LP interest in Latin America has surged recently, according to figures compiled by Venture Equity Latin America. Latin America private equity funds drew roughly $1.02 billion in 2004.
Funds targeting Brazil and Mexico drew roughly 60 percent of the total capital commitments, according to the statistics.
Only $417 million was raised for Latin American private equity funds in 2003, slightly better than 2002’s total of roughly $400 million. The new regional figures are still significantly lower than the more than $3.6 billion raised in 1998.