Spanish Fund arrives in Brazil with 400 million to invest
O Estado de S. Paulo
One of the oldest private equity funds of Spain, Mercapital, is landing in Brazil with 400 million in cash to invest in Brazilian in companies that operate in emerging segments of healthcare, consumer goods and infrastructure. The office opened in September in São Paulo is the first of the fund outside Madrid. This is also the first time that the Spaniards of Mercapital intended its assets to outside companies.
The focus is Latin America and especially Brazil. It is expected that two thirds of the investment are snapped up by Brazilian companies. But there is also interest in the Chilean, Colombian, Argentine, Mexican and Peruvian markets. The next office should be opened in Bogota. "The opportunities here are limitless", says president of Mercapital, Javier Loizaga. He speaks of Latin America with the enthusiasm of those who suffered three long years of crisis in Europe and expects to find in Latin American companies a new opportunity of growth.
The fund arrives to the country with a different strategy: it does not want to compete with the local private equity funds (which invests in the purchase of slices of companies). Instead of invest resources directly in Brazilian companies, Mercapital will capitalize Spanish companies and encourage their entrance in Brazil. "It is not a purely financial transaction, it is industrial", explains Loizaga. "We provide money and the expertise of the companies in which we participate." Although they are pocketed by the Spaniards, the 400 million are exclusive to buy market share in Latin American companies. This money was received by the fund in 2007 in an operation that raised 1 billion, of which 600 million was already invested.
Spaniards tend to invest from 30 million to 120 million in each transaction. On the radar, there are medium-sized family businesses with a turnover of up to 300 million. Today there are 19 businesses in its portfolio, most in the segments of health (ranging from pharmacies to gyms), consumer goods (mainly food) and ancillary services in infrastructure. Among the companies of the portfolio with the potential to closing deals in Brazil are Reccoleta, the laboratory chain of diagnostic through image, and Ossa, leader in construction of tunnels at highways. Without going into details, Loizaga says there are three businesses that are already in the due diligence phase, in which the company accounts are being analyzed. There is a considerable interest of the fund for the South and the interior of São Paulo. "The State is equivalent to nearly a Spain."