A recent survey by KPMG indicated that GPs are allocating more and more capital to investment opportunities in Mexico. The report found that the country had outpaced Brazil as the primary destination in Latin America for private equity investments. Only 28 percent of respondents to the survey said they would invest primarily in Brazil in the future, compared with 43 percent in 2006. By contrast, 47 percent identified Mexico as the primary investment destination for the future, an increase of 13 percent on 2006.
GPs are not just looking to Mexico to make one-off investments – they are also raising funds dedicated to investments in the country. The Carlyle Group recently pulled together $134 million (€103 million) for a debut countryfocused fund. Carlyle invested 29 percent of the fund in two investments in 2005 – Hispanic Teleservices Corporation, a provider of outsourced contact centre services, and Universidad Latinoamerica, a private university with campuses in Mexico City and Cuernavaca.
Says Andres Obregon of Carlyle Mexico Partners: “Private equity investors are attracted by the huge growth potential of the market. This growth potential is driven by the country's improved political and economic climate, and by its geographic location.”
He continues: “The recent political and economic stability has increased the availability of debt, while proximity to the US gives Mexico another compelling advantage over other countries. The US has been investing increasing amounts in a country that it has a deep cultural affinity with.”
In a context of voracious investor appetite for emerging market opportunities, it is likely that more and more private equity funds will look to capitalise on the growth potential of this thriving market.
ALEX FORBES CONSORTIUM INCREASES OFFER
The consortium bidding for Alexander Forbes, a South African financial services company, has increased its offer from ZAR16.25 per share to ZAR17.00. The consortium includes South African private equity firm Ethos Private Equity, Harbourvest Partners of the US, two Canadian investment funds and various South African investors. The original offer was submitted in December last year. The higher offer is thought to increase the total value of the deal from ZAR8.4 billion to ZAR8.8 billion ($1.12 billion to $1.18 billion).
ROHATYN HIRES FORMER PERUVIAN PRIME MINISTER
Pedro Pablo Kuczynski, a former prime minister of Peru, has joined The Rohatyn Group as senior adviser in charge of the asset management firm's private equity activities. His previous positions in finance have included chairman of First Boston International and chief executive officer of the Latin America Enterprise Fund. Founded in 2003 by Nicolas Rohatyn, The Rohatyn Group has $2 billion (€1.5 billion) under management with offices in New York, Singapore, Hong Kong, Uruguay and Buenos Aires. Nicolas Rohatyn was previously co-head of global fixed income at JP Morgan.
ACON ACQUIRES STEEL BUSINESSES IN MEXICO, BRAZIL
US-based ACON Investments has bought engineering company ABB's two steel manufacturing businesses in Mexico and Brazil for an undisclosed amount. The businesses will be merged into a single, independent company named SAE Towers, which will be headquartered in Houston, Texas. The new company will be the largest manufacturer of steel lattice towers in the US. Luigi Ruggieri, formerly a director at ABB, will become SAE Towers' chief executive. ACON has offices in Washington, Los Angeles and Madrid, and manages more than $1 billion (€760 million). ABB is headquartered in Zurich, and is listed on stock exchanges in Switzerland, Stockholm and New York.
EMERGING MARKETS ALL THE RAGE
Private equity funds focused on emerging markets in Asia, Eastern Europe, the Middle East, Latin America and Africa raised $33.2 billion (€25.1 billion) in 2006, according to the latest research by the Emerging Markets Private Equity Association. This represents a 29 percent increase on 2005, when $25.8 billion was raised, and is more than five times the $6.5 billion raised in 2004. Regions that experienced a substantial increase in investor demand included sub- Saharan Africa, with growth of 198 percent, and Latin America, with growth of 109 percent.
DARBY RECRUITS MANAGING DIRECTOR FOR BRAZIL
Darby Overseas Investments, the private equity business of Franklin Templeton Investments, has hired Fernando Gentil as managing director of its investment operations in Brazil. Gentil was previously in charge of Swiss Re's structured finance operations in South America and of ING Baring's corporate finance activities in the region. During the last ten years, Darby has invested more than $175 million (€133 million) in 12 Brazilian or Brazil-related companies. It aims to invest another $500 million in the region during the next five years.