NEW YORK - America's Capital Fund, which specializes in Latin American private equity, so far has invested in eight companies since its launch two years ago.
Sponsored by Baring Latin America Partners LLC, New York, and seeded with $45 million from ING Group, Baring's parent, the fund's officials studied more than 400 deals before making their selections, said Varel Freeman, senior partner at Baring Latin America Partners.
"Now when we go out to fund-raise we will be able to offer a bit of history," said Mr. Freeman, who plans to target institutional investors in Europe, the Middle East and Asia, as well as the United States. The fund seeks to raise $300 million.
"We will be investing between $10 million to $30 million in modest companies that are growing modestly. There is a limit as to how much we can deploy."
The strategy is to apply new business models and new technology to Latin American companies. The fund will invest mainly in financial services, business services and software, said Mr. Freeman, noting the private equity opportunities in Latin America are quite different from those in the United States.
He added that since Latin America has been off the private equity radar screen, it's easier to find good deals there than in other offshore markets such as Asia, where competition has been heating up. The fund has two people based in Brazil, four in Mexico and two in New York.
Getting in early
"Since we've got a local presence, we can get in early. We don't look at bank deals. We would rather invest in entrepreneurs, and companies we can take public on the Nasdaq or sell to a strategic partner in the United States, Europe or Asia, so we need to pick companies that have financial appeal."
Latin American companies traditionally have been family-owned, but dealing with generational issues and family decisions can be frustrating. "Often management isn't sophisticated. Their book-keeping isn't clear. And it can take a long time to reorganize these companies. The America's Capital team is more interested in the new generation of Latin American entrepreneur, who understands private equity, seeks financial gain and wants liquidity in three to five years. It also prefers to invest in companies where management has some capital at risk."
Among the companies in the portfolio are Mastersaf, Rio de Janeiro, which provides tax software, information and processing services to companies. "They connect your computer to their computer system and do the calculations and storage, which helps companies become more efficient," Mr. Freeman said.
America's Capital Fund has invested nearly $10 million in the company to date. "When we fund companies like Mastersaf, we monitor them, to be sure they're lean and mean. We want to determine if their strategy is working before we invest more."