Washington, D.C., February 13, 2007—
IFC (International Finance Corporation), the private sector arm of the World Bank Group, has approved an equity investment in Mexico’s Nexxus Capital Private Equity Fund III, L.P., which will support midsize companies that need a strong partner to help them improve their internal structure and succeed in an increasingly competitive marketplace.
IFC’s financing is for the lesser of $20 million or 25 percent. Nexxus Capital III is expected to raise $200-250 million in funding to support six to 10 companies. The fund may also invest up to 20 percent of its commitments in Central America.
IFC has become a strong brand recognized in private equity funds in Mexico and Latin America and is seen as a partner that adds value and sends a good signal to institutional investors. This investment fits well with IFC’s strategy to support emerging local fund managers.
“Shrinking bank lending in Mexico has left middle-market companies with few funding alternatives. In this context, private equity funds can be an essential source of funding and management expertise for midsize companies, which are one of the largest sources of employment in Mexico,” said Haydee Celaya, IFC’s Director for Private Equity and Investments Funds.
Nexxus Capital Managing Partners, Luis Harvey and Arturo Saval, stated that, “IFC has given us an extremely important vote of confidence by investing with us, one of the first Mexican private equity managers, for the third time. Although this is our third fund raised for Mexico, it is the first to be raised and managed completely by the local team. We expect to continue investing in the same type of companies as during the last nine years, with investments in the $15-30 million range.”
Nexxus Capital III Fund is sponsored by Nexxus Capital, S.C., a Mexican company jointly owned by Luis Harvey and Arturo Saval. Nexxus Capital invests in middle-market Mexican companies that target the country’s rapidly growing middle-income population. Nexxus Capital is the first all-Mexican private equity team and has been very supportive of the asset class. The investment opportunity for Nexxus Capital III centers on the rapid economic and demographic growth in Mexico and the positive macroeconomic conditions that are in place.
IFC in Mexico:
Since 1956, IFC has invested $5.6 billion, including $2.2 billion in syndications, in sectors ranging from infrastructure and manufacturing to agribusiness and the financial sector in Mexico, making it the region’s third-largest recipient of IFC financing in dollar value, after Brazil and Argentina. IFC committed $260 million in FY06 in new financing in Mexico, and it held a total portfolio of $1.1 billion, including syndications, as of July 31, 2006.
IFC’s strategy for Mexico focuses on enhancing the competitiveness of the private sector; further deepening the financial sector with the introduction of specialized products and markets; promoting investments in areas newly opened to private sector participation; and promoting sustainable environmental and social development and good corporate governance.
The Nexxus Capital fund is among a handful of Mexican and regional private equity teams that first raised capital in the mid-1990s and have successfully raised follow-on funds. Others include Advent and Darby, both regional funds in which IFC is an investor. IFC also recently committed to Carlyle Mexico, which will target generally larger deals than Nexxus Capital fund. The private equity opportunity in Mexico is considered sufficiently large, and the strategies of these managers sufficiently diverse (as well as generally control-oriented), that the funds’ respective portfolios are not expected to have significant overlap, if any.
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org
.
