Emerging markets have become the new playground of private equity interest, as investment in these previously less popular territories has increased. Mexico has become one of the hotspots in the emerging market arena, with a number of significant investments taking place in the Latin American country this year.
Global investment firm Eton Park Capital Management, which has more than $5.5 billion in assets under management, has made a number of investments in Latin America, and its most recent one took place in Mexico. The firm joined Impulso de desarrollos Estrategicos SA (IDESA) to acquire a 60 percent equity interest and control of PIMSA, the industrial products (€341 million) in October, the firm said in a statement. Kimberly-Clark retained a 40 percent stake.
IDESA owns the PIMSA paper products line, which includes printer and writing paper. PIMSA notebooks are sold under the Scribe umbrella brand, which was launched in 1970 and accounts for approximately 80 percent of the Mexican notebook market, according to Eton Park.
“Our ability to structure this investment, which includes an innovative financing component, is a testament to the strong development of the capital markets in Mexico,” said Edward MIsrahi, a senior managing director at Eton Park, in the statement.
Merrill Lynch Global Private Equity has also shown interest in Mexico recently, The firm acquired Grupo Convermex, a producer and distributor of plastic disposable tableware products in Mexico, from JPMorgan Partners for an undisclosed amount, Merrill Lynch said in a statement in October.
Convermex has five manufacturing plants and 18 distribution centers in Mexico. Demand for disposable table were – including trays, containers, lids, cups and plates – has grown steadily in Mexico, Merrill Lynch said.
Earlier this year, Mexico's private equity market drew attention when global buyout firm Advent International announced a $200 million leveraged acquisition of Conttroladora Milan, Mexico's largest discount clothing retailer, from an investor group led by Newbridge Latin America. The deal, which closed in May, involved the use of $110 million of equity capital and $90 million of debt, Advent said. It was the first transaction in Mexico that used a large amount of leverage based on cash flow, according to the firm.
Founded 70 years ago and with 257 stores in 120 Mexican cities that sell clothes geared toward men, women and children, Controladora Milano has approximately $260 million in annual sales.
EQUITY INTERNATIONAL BACKS BRAZILIAN MALLS
Chicago-based Equity International, an affiliate of Sam Zell's equity Group Investments, has invested $44.5 million (€34.8 million) in the ECISA Group. ECISA owns, operates and leases major shopping centers in Brazil. GP Investmentos, a Brazilian private equity firm, also took part in the investment. Each firm acquired approximately 14.4 percent of ECIS's shares. Ira Chaplik, Equity International's chief operating officer, and Thomas McDonald, the firm's executive vice president, will become members of ECISA's board of directors. GP Investmentos representatives will also join the board.
ETOHS CLOSES RECORD AFRICAN FUND
South African firm Ethos Private Equity closed Ethos Fund V at R5.5 billion ($750 million; €589 million) at the end of October. The fund is the largest in Africa and is more than twice the size of the previous record holder. Limited partners, which include Teachers' Private Capital in Canada, have the option to co-invest so that Ethos can take on larger deals. Ethos has already funded three acquisition from the fund, including an electronic payment business, a plumbing company and a sports retailer. Ethos specialises in medium and larger South African and African buyouts, growth capital and privatisation opportunities.
ACTIS ADDS TO CAIRO TEAM
Actis, a private equity firm that targets emerging markets, has hired Ahmed Dabbous to lead its operations in North Africa, The North African office is located in Cairo, Egypt. Dabbous has worked at the International Finance Corporation, where he led the investment teams that focused on the manufacturing and service sectors for seven year. He also served as an advisor to the US government about establishing a fund in the Middle East.
INTEL CAPITAL PORTFOLIO COMPANY GOES PUBLIC
Intel Capital's portfolio company SONDA, a system integrator and investment technology service provider in Latin America, went public on Chile's Santiago Stock Exchange in early November. The company sold 26 percent of SONDA at 566 Chilean pesos ($1.08) per share. The initial public offering resulted in proceeds of approximately $215 million.
SPHERE CLOSES DEBUT FUND
Sphere Private Equity, a South African private equity firm, closed Sphere Fund 1, its debut fund, on R300 million ($40 million; €32 million), in early November. Sphere is a joint venture with Ethos Private Equity. Ethos holds 30 percent of the business, and Sphere's management controls the remaining 70percent. “We are looking primarily at investing in companies showing a competitive advantage in their sectors and an enterprise value of R50 million to R200 million,” said Itumeleng Kgaboesele, Sphere's chief executive.
$3BN SOUTH AFRICAN FASHION RETAILER IN PLAY
Private equity firms Brain Capital, The Blackstone Group and Kohlberg Kravis Roberts are conducting negotiations to buy Edgars Consolidated Stores, a South African fashion retailer, for $3 billin (€2.2 billion), the Wall Street Journal reported in early December. The firms may form a consortium to buy the company together, the newspaper said, but no decisions had been made. The company owns the fashion stores Edgars and Jet, as well as the stationary stores CAN. All bids for the business need to be submitted by January
ETHOS PURSUES GLASS PACKAGER
A consortium of private equity firms led by Ethos Private Equity intends to bid on Consol, a South African glass packaging company, Consol Said in a statement. The value of the company is approximately R6 billion ($895 million; €671 million). Consol is the largest glass packaging firm in South Africa and has a 75 percent share of the country's glass packaging market, according to Reuters.