Hot on the heels of its oversubscribed Brazil Special Situations Fund II's final close, the insurance giant's Latin America private equity team has already invested $112.5 million (€73 million). The fund closed on $692 million in April, exceeding its $400 million target.
In May, AIG purchased a minority stake in farmland company Calyx Agro for $65 million. Calyx Agro, which is sponsored by agribusiness group Louis Dreyfus Commodities, will purchase underutilised farmland, improve production yields and then sell for a profit. The company will primarily invest in Brazil while also looking at opportunities in Uruguay, Paraguay and Argentina.
Calyx Agro's value-add for purchased farmland will include converting pastures to planted fields, maximising the usable area of properties and applying best practices in areas such as crop rotation and fertilisation.
The fund's previous investments were in Brazilian fabric manufacturer Providência and flower company Falcon Farms, which has operations in Colombia, Ecuador and Mexico.
The Brazil-focussed vehicle will also pursue opportunistic investments in Mexico and Colombia, among other Central and South American countries.
“Brazil, Mexico and Colombia have seen tremendous growth over the past several years driven by rising customer purchasing power, increased global trade and economic stability,” said Ana Vigon, head of Latin America private equity at AIG Investments.
The fund's target companies are those positioned to capitalise on the region's growing domestic consumption and consolidation opportunities.
AIG attributed its successful fundraising to the track record of its $215 million predecessor fund and the demand for Latin American investment opportunities, particularly in Brazil where demand is expected to rise following US rating agency Standard & Poor's upgrade of the country to investment grade (see news item, opposite page).
“Our portfolio companies will have increased access to debt as a financing alternative for growth, as well as taking advantage of the expected increase in liquidity to create attractive exits,” Vigon told Private Equity International in regards to the upgrade. American International Group's asset management unit AIG Investments, which manages more than $750 billion in assets, currently has Latin American offices in São Paulo and Mexico City, with plans to open a third in Bogotá.
OPIC LAUNCHES $1BN LATAM INITIATIVE
The US' Overseas Private Investment Corporation (OPIC) has launched an alternative investment initiative as part of an effort to stave off the effects of a US slowdown on Latin America. OPIC is currently soliciting proposals from US private equity firms to create new funds exclusively devoted to Latin American industries struggling to access capital, including infrastructure and exports. OPIC will commit between $25 million (€16 million) and $150 million in senior secured debt across three to five new funds. OPIC commitments will comprise between one-third and one-half of the total capital in each fund. Once the funds attract commitments from other limited partners, up to $1 billion in private equity investment could be making its way south of the border.
COLOMBIAN BUYOUT FIRM TO INVEST $25M IN PETROLATINA
TribeCapital Parners (Tribeca) has agreed to invest $25 million (€16 million) in PetroLatina Energy. Londonbased PetroLatina is an oil and gas exploration and production company focussed on Colombia with interests in Guatemala. The capital will be used to develop the company's exploration prospects and assets in Colombia. PetroLatina is concentrating on its Colombian operations following the sale of its Guatemalan assets. The company retains a 20 percent interest in three Guatemalan wells to be drilled in the future. The investment was made from Tribeca Fund I which has $135 million in commitments.
GP ACQUIRES DRILLING ADD-ON
Publicly-listed Brazilian private equity firm GP Investments has acquired 100 percent of the stock of Brazilian drilling company Sociedade Técnica de Perfuração (SOTEP) for $112 million (€73 million). The add-on acquisition was made through GP platform company San Antonio Global, Latin America's largest onshore oil drilling, exploration, and production services company. San Antonio was formed in 2007 after GP acquired the Latin American onshore operations of Pride International. SOTEP is Brazil's largest onshore drilling service provider. This is the first acquisition by San Antonio with other strategic initiatives planned as the company expands aggressively throughout Latin America with a focus on Brazil, Colombia and Mexico.
EMP COMPLETES MEXICAN TELECOM EXIT
EMP Global's AIG-GE Capital Latin America Infrastucture Fund (LAIF) has completed its exit from its $85.5 million (€55 million) investment in Mexican greenfield company Axtel, more than two years after the company's $345 million initial public offering on the Mexican Stock Exchange. The fund participated in the November 1997 start-up of Axtel, which was awarded a national concession to provide telecommunications services in competition with former monopoly holder Telmex. LAIF divested half its initial 15 percent stake as part of Axtel's IPO in December 2005. The fund then sold another third of the original shareholding in the first half of 2007.
RIO BRAVO INVESTIMENTOS BUYS 24 PERCENT OF FLEET ONE
Brazil-based investment firm Rio Bravo Investimentos has acquired a 24 percent stake in Fleet One Gestao de Frotas, a Brazil-based manager of truck fleets. The value of the transaction was not disclosed. The remaining 76 percent of Fleet One is owned by its president and founder Paulo Silveira, former president of Blockbuster in Brazil. The firm has projected revenues of R$30 million ($18 million; €11.5 million) in 2008.
BRAZIL BOOSTS LATIN AMERICAN PRIVATE EQUITY
Brazil represents 60 percent of Latin American private equity funds and dominates the region's investments and exits, according to Roger Leeds, board chairman of the Emerging Markets Private Equity Association. He told delegates on 16 April at the Brazilian private equity association's conference in Rio de Janeiro that the country's fundraising totals have risen dramatically, from $4.7 billion (€3 billion) in 2003 to $59 billion last year. That growth is helping the region close the emerging markets gap between Latin America, the third most popular region, and Asia and Russia/Eastern Europe, respectively the first- and second-most popular emerging markets, Leeds said.
BRAZIL UPGRADED TO INVESTMENT GRADE
Brazil received an investment grade credit rating from US rating agency Standard & Poor's for the first time on 30 April. “The investment grade according to S&P surprised the market in general,” said Mercatto Investimentos partner Thomas Tosta de Sá. “It was expected but not so soon.” In Latin America, only Mexico and Chile now have a higher credit rating. Private equity funds in Brazil now expect an increase in foreign direct investment given that many institutional investors are restricted from deploying capital to a country with a rating below investment grade. Brazilian stock indexes jumped in response to the announcement from S&P, reflecting the positive impact of the upgrade on Brazilian companies.
GP INVESTMENTS PUTS $155M IN BRAZILIAN EDUCATION
GP Investments has agreed to invest R$259 million ($155 million; €100 million) in Brazilian post-secondary education institution Estacio Participacoes. The investment will be made through Moena Participacoes, a publicly held Brazilian company indirectly controlled by GP Investments' GP Capital Partners Fund IV which closed on $1.3 billion in October 2007. Estacio's founders have agreed to sell GP a 20 percent stake in the institution held by the founding individuals. Following the sale, GP and the founders will share control of Estacio in regard to electing board members, hiring senior executives, executive compensation, budget approval and acquisitions.
AUREOS SIGNS AGREEMENT WITH COSTA RICAN EXCHANGE
Aureos Capital's Emerge Central America Growth Fund (EMERGE), one of Aureos' three Latin America private equity funds, has signed a cooperation agreement providing preferred access to companies on Costa Rica's junior stock exchange, El Mercado Alternativo para Acciones (MAPA). The cooperation agreement put in place is between Aureos and MAPA sponsor Carlos Mora de las Orden. In addition to providing EMERGE with preferred access to MAPA-sponsored companies, Orden will also recommend companies to EMERGE with the understanding that EMERGE will register those companies with MAPA at a later date. Aureos raised the $36.3 million Aureos Central America fund in 2002, and in 2006 was selected by the Inter-American Development Bank to manage the EMERGE's $21 million.