Serious about dining

In an ambitious move, Advent International has formed the largest casual dining group in Latin America, International Meal Company, by acquiring and then consolidating six restaurant chains.

“IMC is an example of where we're leveraging our regional process to create a regional company because IMC is not a single-country strategy,” São Paulo-based managing director Martín Escobari told PEI. “It is Central America, the Caribbean and South America with one management team and three Advent offices working together on different parts of the deal.”

Advent most recently acquired Brazilian highway restaurant chain Frango Assado from its founding families for an undisclosed amount. Frango Assado operates 12 restaurants and retail stores located along São Paulo's most traveled highways.

Advent created International Meal Company to hold its Latin American restaurant investments. Frango Assado is joined by: Brazilian casual dining chain Viena; Brazilian airport restaurant operator Grupo RA; Mexican casual dining chain La Mansion; Mexico-based French bistro chain Champs Elysees; and Puerto Rican airport restaurant and in-flight catering company IMC Caribe.

“The fact that we are a regional Latin American private equity investor is helping us create regional platforms that will have the critical scale to access the markets and become interesting for strategic advisors,”said Escobari.

Advent has pursued the casual dining sector in Latin America because it is fragmented, not professionally run and is in a position to benefit from the continent-wide rise of the middle class, said Escobari.

“We're choosing strategies and companies that have premium locations so it's almost a real estate play,”said Escobari, highlighting high-traffic airports, shopping malls and highways as prime locations.

With regard to the global economic turndown, Escobari said: “I don't think [Latin America] will be 100 percent immune but so far we haven't seen any impact and we don't think that the impact will be very severe.”

Mexico will be more affected by the global economy than the rest of Latin America as the result of its ties to the US, according to Escobari. He predicts approximately three years of slower growth in that country but does not expect the economy to contract.

BRAZILIAN CAPITAL RAISES
After five years, Darby Overseas Investments, the private equity division of investment manager Franklin Templeton Investments, has closed its Brazil Mezzanine Infrastructure Fund on R$387.5 million (€141 million; $204 million). The joint venture between Darby and Brazilian private equity firm Stratus Group is the first mezzanine fund devoted exclusively to Brazilian infrastructure, according to the firms.

Stratus Group, a Brazilian private equity firm, is working to raise $300 million for its first fund to include international limited partners. The mid-market fund is in its initial marketing stages and is expected to close next year. Stratus also is nearing the close of its fourth private equity fund on R$120 million (€45 million; $66 million) for growth capital investments in Brazil.

São Paulo, Brazil-based FAMA Private Equity has closed its first private equity fund on R$100 million (€40 million; $56 million), just shy of the firm's target of between R$120 million and R$150 million. The fund has raised capital from roughly 200 individuals, family offices and endowments over the course of approximately six months.

Publicly-listed Brazilian private equity firm GP Investments will subscribe up to R$185 million (€62 million; $85.5 million) in convertible debentures to be issued by the controlling shareholder of Almeria Participações. Almeria will in turn acquire 51 percent of the voting shares and 45 percent of the total capital of dental clinic chain Imbra.

PORTFOLIO GROWTH
The Car lyle Group portfolio company Veyance Technologies, which manufactures and sells Goodyear-branded industrial power transmission products, has expanded into Latin America. The company has acquired Brazilian conveyor belt supplier and service provider RCT Servicos de Vulcanizacao. Carlyle acquired US-based Veyance for $1.5 billion in July 2007.

The Blackstone Group portfolio company Hilton Hotels plans to quadruple its presence in the Caribbean and Latin America by adding 150 hotels to its portfolio over the next five years. The company has 42 properties in the region in its pipeline. Blackstone acquired Hilton for $26 billion in October 2007.

ON THE BLOCK: AIG ASSETS IN LATIN AMERICAAIG Investments, the asset management unit of embattled US insurance giant American International Group, is on the auction block along with most of the company's business lines. AIG plans to sell as many assets as necessary to repay its $85 billion loan from the US government. As the company itemises its assets, Private Equity International has taken its own snapshot of the firm's private equity holdings in Latin America

Fund Name Primary country focus Strategy Size Final close
AIG Brazil Special Situations Fund II Brazil Balanced growth equity $692m 2008
AIG Brazil Special Situations Fund I Brazil Balanced growth equity $215m 2001
AIG Southern Cone Fund Argentina and Chile Growth equity (telecommunications and energy) Undisclosed 1999
AIG GE Capital Latin America Infrastructure Fund Regional Infrastructure (telecommunications, power, transportation) $1bn 1997