The fund-raising environment might be cold in the United States, but Baring Private Equity Partners is finding Latin America hot, hot, hot! The firm is set to launch two funds in the region before the end of the end of March.
The London-based company is launching a $250 million fund targeting Mexican growth-stage companies in the consumer products, finance, food products and housing sectors. The fund, to be named Baring Mexico Private Equity Fund II, will mark Baring’s second foray into Mexico. In 1995 it closed the $67 million Baring Mexico Private Equity Fund LP.
Baring also will begin marketing a larger fund, still unnamed, to finance distressed companies based primarily in Argentina and Brazil. It will target companies with healthy fundamentals that have been battered in the public markets.
That fund does not yet have a fixed size.
The 1995 launch of Baring’s Mexican investment fund marked the firm’s entry into Latin America. It followed that fund with Baring Latin American Partners I, a $300 million fund, in 2000. Both funds invested in private and public companies in business services, financial services, communications, manufacturing, media and software.
Although the region was struck by a financial meltdown that began in 2000, the Baring funds have already realized gains, returned profits to their limited partners, says Varel Freeman, a senior partner based in the firm’s New York office. Baring counted four exits last year-one in Argentina, two in Brazil and another in Mexico.
Its success with past Latin American funds may smooth some of the bumps that its Latin American team expects to find as it begins a fund-raising drive. “It remains a very difficult environment,” Freeman says. “There’s a flight to quality, and there is a lesser amount of money in the marketplace. Limited partners are taking longer to do due diligence and they’re doing more due diligence than before. Investors are choosier and tougher and more probing in their questions.”
Baring plans to target institutional investors in the United States, Asia and Europe.
While the Mexican fund will finance growth-stage private companies, the Argentina/Brazil fund will focus on distressed companies in the consumer products, media and telecom sectors-what Freeman calls “good companies in the wrong zip code.”
Baring Americas’ six-man investment team makes both majority and minority investments, opting for minority stakes only when a company’s management interests are aligned with the fund’s interests.
In Mexico, Baring Americas will scout companies with proven products and services and fund growth through expansion, consolidation or productivity enhancement.
Baring Private Equity Partners is the private equity arm of the ING Group. It manages funds worth $2 billion in Asia, Central Europe, India, Latin America, Russia and Western Europe.