Making inroads

After fundraising since 2006, the Central American Mezzanine Infrastructure Fund has held a first close on $82.5 million. The fund has had commitments of more than $155 million approved by institutional investors, slightly more than a $150 million target. However, only a portion of the capital has been activated at this point.

The fund's investors are largely development organisations including: the Inter-American Development Bank (IADF); World Bank unit the International Finance Corporation (IFC); the Netherlands Development Finance Company; the Central American Bank for Economic Integration; and CorporaciónMexicana de Inversiones de Capital.

Primary investors are theWashington, DC-based IADF and the IFC, which made commitments of up to $60 million and $50 million respectively.

In their capacity as development organisations, the fund's limited partners hope to demonstrate the viability ofmezzanine lending in CentralAmerica and encourage the development of similar vehicles in an attempt to assist the development of infrastructure projects.

“Infrastructure investment remains among the most important challenges facing Central America,” the IFC says on its website.“The region's ability to grow, compete and reduce poverty is constrained by the bottlenecks in the power, water, road, ports and rail sectors.”

The CentralAmericanMezzanine Infrastructure Fund is designed to address one of the key challenges to private and public-private partnership infrastructure projects, which is the scarcity of subordinated debt and equity capital available to developers.

The main geographic investment focus is on projects in Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic. The fund will also have a limited allocation toMexico and Colombia.

Roughly 10 to 15 projects will be backed in a range of infrastructure sub-sectors including but not limited to energy, transport, water and sanitation and telecommunications. Opportunistic investments in infrastructure-related sectors such as natural resources, housing, agribusiness and tourism will also be considered.

The fund's manager, EMP Latin America, was selected in a competitive bidding process. EMP Latin America is a joint venture between EMP Global and four members of infrastructure specialist EMP Global's Latin American team. The group is headquartered inWashington, DC with an office in Buenos Aires, Argentina.

The group is currently divesting EMP Global's AIG-GE Capital Latin America Infrastructure Fund for which it was the principal adviser. The fully invested fund closed on $1.1 billion in 1996 and targeted equity investments in South America, Mexico, Central America and the Caribbean.

South Africa-based bank Standard Bank Group has relocated its headquarters for the Americas from New York to São Paulo. Standard is currently raising a private equity fund to invest $250 million of the bank's money in Brazilian companies. The former co-head of Latin Amer ica for Goldman Sachs , Eduardo Centola, was hired to head the Americas operation.

Brazilian private equity and venture capital firm DGF Investimentos has launched its FIP Terra Viva Fund, which has $140 million in committed capital. The fund will target a wide range of opportunities within the ethanol industry in Brazil, including consolidation projects, greenfields, services and equipment.

Mexico City-based private equity firm Alta Growth Capital has made an undisclosed investment in Amerimed, a Mexican provider of healthcare services in tourist destinations. Amerimed currently operates four hospitals and one clinic and will use the investment to strengthen its new facilities and support expansion.

Brazil-based alternative asset manager Gávea Investimentos reportedly plans to increase its holdings of private equity to offset losses at its flagship hedge fund. Gávea is now considering the launch of its fourth private equity fund. Fund III closed on $1.2 billion last August and is currently half invested.

Brazilian venture firm FIR Capital has invested an undisclosed amount in Belo Horizonte, Brazil-based Samba Tech from its FundoTec II Fund. Samba Tech is a start-up focused on providing infrastructure and related services linked to digital logistics.

Global private equity firm Advent International has promoted Alfredo Alfaro and Patrice Etlin to managing partner in Latin America. Alfaro is a founding partner of the firm's Mexico City office. He previously spent 14 years at Mexican bank Grupo Financiero Probursa, where he became a senior investment officer in the bank's private equity group. Etlin launched Advent's investment activities in Brazil in 1997, before which he was a partner at International Venture Partners in São Paulo.

Intel Capital, the venture arm of US semiconductor giant Intel, has purchased a minority stake in Brazilbased online video distributor Truetech for an undisclosed amount. Intel Capital in 2006 created a $50 million venture capital fund to promote technology growth in Brazil.

US investment firm Evercore Partners has closed Evercore Mexico Capital Partners II on $126 million in capital commitments after 18 months of fundraising. Investors in the fund include US and Mexican limited partners. The fund has made one investment to date in More Pharma, a prescription pharmaceutical company focused on the Mexican market.

Private equity investors in Latin America don't expect the region's deal market to begin recovery until 2010, but say it continues to offer greater investment opportunities than many other areas, according to the 2009 Annual Latin America Private Equity Survey of private equity stakeholders by KPMG, the financial services firm. All respondents to the poll said the global economic crisis had affected Latin America, but 67 percent said it had only a moderate negative impact on the region.

2008 LATIN AMERICA FUNDRAISING HOLDS STEADYDespite a difficult market for global fundraising, the emerging markets raised a total of $66.5 billion in 2008, up from $59.1 billion in 2007, according to the Emerging Markets Private Equity Association. Fundraising for Latin American and the Caribbean remained more or less steady at $4.46 billion across 22 funds, up roughly $40 million year-over-year. Brazil dominated fundraising in the region with 10 funds gathering $3.6 billion

Geographic focus Funds raised in 2008 Number of funds
Argentina $22 million 1
Brazil $3,600 million 10
Colombia $36 million 1
Mexico $209 million 3
Peru $216 million 4
Regional $389 million 3
Total $4,460 million 22