WASHINGTON, D.C. – At a time when most investors are shying away from both technology-related investments and investment in Latin America, Washington-based Newbridge Latin America/ Newbridge Andean Partners LP (an affiliate of the Texas Pacific Group) has created Newbridge Technology Ventures, a new $50 million technology fund for the Latin American region.
“The sources of capital for technology-[related] investments in Latin America are drying up,” said Daniel Jinich, a partner with Newbridge Latin America. He added, however, it was that very dry spell that prompted the new fund launch.
“We want to be in a position to take advantage of the opportunities that are there,” he explained. “And there are more opportunities now given that there’s less competition – there’s not seven firms competing over the same deal. We play a valuable role for firms that are not comfortable making investments on their own. We act as an intermediary.”
The first closing for the fund was $40 million. Lead investors included CVC Capital, Global Equity Partners, ING Barings and Donaldson, Lufkin & Jenrette.
“Some investors are more bearish on Latin America in the public markets, but we see great opportunities for the right stories in private equity for long-term returns,” said Gordon Kingsley, Jr., managing partner and head of private placements at ING Barings.
The new fund will have a regional focus, as many technology ventures are pan-regional in nature, said Jinich, adding that the fund will focus on the areas of infrastructure, Internet consulting, logistics and fulfillment (enabling e-commerce) and wireless and broadband.
A good example of this is Newbridge’s $60 million investment last spring in Diveo Broadband Networks, a major provider of fixed wireless broadband services in Latin America. At the time, Newbridge Managing Partner Richard Schifter said, “We see significant opportunities in telecom in Latin America, particularly in broadband transmission.”
Newbridge Latin America currently has 17 companies in its portfolio. Aside from telecommunications, technology and the Internet, Newbridge invests in branded foods and consumer products, industries in transition and companies requiring expansion capital in general.
Regarding the new fund, Jinich said, “We’re staying away from the models that have had a rough go, [such as those] predicated on advertising [and/or] are capital intensive.” He also said investments for the new fund will have a slightly different focus than other Newbridge deals in the region.
“We will focus primarily on early-stage, higher-risk investing,” he said, with about $5 million deals, rather than the average of $20 million. But, he added, his firm will be looking for companies that are completing business plans to be cash-flow positive.
Regarding a second closing, Jinich explained that with the way the fund is still actively accepting offers.
“We will accept one to two more investors at any point,” he said, adding that he expects the fund to be fully invested over the next 18 months.