Latin Finance - May/June 2010 - 35

mexican ccds

CCD in November, raising a 750 million peso deal. That it fell short of its 1 billion peso target demonstrates how much Afores were still coming to understand the new asset class at the time, as well as how fickle the final size can be, even in the days before closing. Credit Suisse managed the sale. Atlas Discovery Capital followed in December with a 1.1 billion peso transaction tied to a private equity fund. EMX is now preparing a deal, expected to be of similar size to Nexxus and Atlas, raising funds for a private equity fund able to make a broad range of investments in Mexico over a fiveyear period. It expects to make 8-10 investments at 150 million to 500 million pesos each. Each features a remuneration structure similar to the private equity standard – a return on the initial investment plus a 10% preferred return, before dividing funds 80% to investors and 20% to the managers. “When you invest in a private equity team, you invest in a track record and in a credential,” says Joaquín Ávila, managing director at EMX Capital, which manages the Mexican business of Carlyle Group. EMX in April was marketing its own new CCD, and Ávila claims that a visible track record helped some of the completed private equity CCDs get done sooner than others. EMX has about $94 million currently invested, according to regulatory documents. Like Nexxus, Wamex and Atlas Discovery Capital, EMX will target a broad variety of investments, focusing on the middle market companies, investing $20 million to $50 million per transaction.

subsidiary of MBIA. The Administradora de Fondos de Infraestructura en Mexico vehicle plans to make investments of up to 30 years in different infrastructure areas in Mexico, over a 10-year period. Banamex is managing. The market is still awaiting the first CCD from real estate-focused funds, who like the general private equity and infrastructure-focused investors, hope to win Afore investors over with track record. Prudential Real Estate Investors is planning to raise up to 6.5 billion pesos from what Paulo Gomes, chief strategy officer for the LatAm business, describes as Prudential’s third Mexican industrial fund. Gomes says the fund will invest in light manufacturing and distribution

the pensions’ investing rules. As of last year, Afores are permitted to invest in off-index equity, opening the door to engage in stock picking and ideally making more funding available to small and mid-cap equity issuers. “Last year the CCD seemed like the optimal way to access the Afore funds,” says an official at Tres Marías, a developer in the state of Michoacan. “But with the way that market has developed and with the changes to the Afores’ investment rules, we’ve decided that the best means is an IPO.” Tres Marias, which is developing a “city within a city” mixed-use project in Morelia, has filed for a transaction of up to 1 billion pesos. The developer had

Pending CCD Deals
Filling up Issuer Vertex EMX (Carlyle) LatAm Capital Advisors (MBIA) Prudential Mexico AMB Marhnos Infraestructura
Source: Bolsa Mexicana de Valores

Size (MXPm) 2,300 TBD TBD TBD 3,000 2,000

Maturity 2020 2020 TBD 2020 2018 2040

Type RE Fund PE Fund Inf Fund RE Fund RE Fund Inf Fund

Managers Credit Suisse Deutsche Bank Banamex BBVA Banamex Ixe

Infrastructure, Real Estate Allure

Macquarie closed the first infrastructure focused fund last year, raising 3.4 billion pesos in a transaction with a 2036 horizon. Credit Suisse managed the transaction, which is also accompanied by funds being privately raised, according to Macquarie. The deal got a boost from Mexico’s state-backed Banobras, which bought 20%. Banobras is also expected to purchase up to 20% of an infrastructure CCD being prepared by LatAm Capital Advisors, a

facilities, targeting a 16%-22% return. Unlike pure private equity, the real estate fund has the ability to start generating revenue very early, he says. This is mostly thanks to rental property income. Prudential put up 10% of the fund itself. BBVA Bancomer is managing the transaction. Meanwhile Vertex Private Equity Investors is targeting a 2.3 billion peso size for its real estate fund-based transaction. It was looking to close the deal through Credit Suisse in May.

The Public Option

The push by some of the world’s biggest private equity names to tap Mexican pension funds has pushed smaller deals to the back of the line. Fortunately for these issuers – generally smaller businesses in need of funds for a new project – hope has arrived in the form of another change to

done marketing for a CCD last year, and was to resume in April pitching an IPO. Ixe is managing the transaction. Proteak, like AGSA a teak tree farmer, launched in April meetings for an IPO instead of a CCD. Bulltick is managing the sale, with proceeds marked for acquisitions and organic growth. Size is expected to be under $100 million equivalent. Other non private-equity issuers that filed last year include Geo’s Geo Maquinaria unit and restaurant operator Grupo House. Securitizations could also be an appropriate alternative for issuers with reliable future cashflow, bankers add. LF

UPDATE

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For breaking news of Mexican CCD transactions, see www.latinfinance.com

May/June 2010

LatinFinance 35
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Latin Finance - May/June 2010

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