RIO DE JANEIRO – Americanas.com, the e-tailing arm of Brazilian department store chain Lojas Americanas, recently received a $40 million cash injection in a first round private equity investment.
Chase Capital Partners (CCP) and The Flatiron Fund led the round with a $16 million investment. Also participating were Sao Paulo, Brazil-based AIG Capital Partners, Next International, Global Bridge and Mercosul Internet. Combined, the new investors will hold a one-third stake in Americanas.com, with the remainder in the hands of Lojas Americanas and Americanas.com executives. The financing transaction places an equity value of $120 million on Americanas.com, according to the company.
A recent report by U.S. consultancy Bain & Co. claimed that bricks-and-mortar companies might win the Internet war in Latin America.
“Many of these incumbents are moving aggressively in hopes of leveraging their significant scale, assets and industry experience to develop winning clicks-and-mortar business models,” the report said. “In the end the winners will be the companies that most effectively incorporate the Internet into their business processes while adapting their strategies to Latin American market place peculiarities.”
Susan Segal, a general partner of Chase Capital Partners, agreed. The fact that Americanas.com is the e-tailing arm of Lojas Americanas, Brazil’s largest general merchandise retailer with 91 stores throughout the country and 800,000 visitors per day, “is a huge advantage in terms of e-commerce,” she said. “There’s always going to be a market for good technology firms despite fluctuations in the Nasdaq,” she added.
“Americanas.com has a valuable business plan, and [the company] already has revenues,” Segal said, adding that she liked that Americanas.com has a scalable platform, a strong management team and significant competitive advantages through its relationship with Lojas Americanas.
Lojas Americanas reported losses of $19.9 million Brazilian Reas for the first quarter ($6.1 million Reas of which were generated by Americana.com), compared with profits of $68.4 million Reas in the same period last year. The new site also increased Lojas Americanas’ operating expenses by $3.8 million Reas.
Americanas.com will use the investment money to continue to expand throughout Brazil. Specifically, it plans to increase its product offering to 50,000 items, to open a new 12,800-square-meter distribution center, to increase the interactivity and customization of Web-store operations and to improve buying and delivery systems.
Segal said the new capital will also be used to place kiosks in the Lojas Americanas stores around Brazil, allowing customers a “real world” point of contact with the virtual store, something, she said, that will leverage the dotcom. According to the company, Americanas.com has the first online order tracking system in Latin America, real-time integration with credit cards and banks and content sites for women and other special interest groups. Americanas.com also plans to expand its operations to Mexico and Argentina over the next three years.
Lojas Is A Star
In related news, the StarMedia Shopping Channel in Brazil, a subsidiary of StarMedia Network, a leading Internet media company targeting Latin America and other Spanish- and Portuguese-speaking markets, is using Lojas Americanas as an anchor store, and StarMedia online has a link to Americanas.com. Additionally, StarMedia recently launched the first virtual e-credit card in Brazil, which will showcase StarMedia Points, the first loyalty points program offered in Latin America where users can acquire points for online shopping purchases to exchange for premium products and services, according to the company.