A Latin America-focused Private Equity Asset Management Firm

Axea LatinoCapital Partners SA specializes in Latin American investment opportunities specifically concentrating on controlled buy-out transactions involving the acquisition of successful medium-sized enterprises with US $ 25-200 million in annual revenue.  The firm is ‘sector-agnostic’, and does not get involved in start-up or early-stage companies. Companies Axea LatinoCapital acquires are in countries that are executing growth-oriented policies with a sound macro-economic focus. Accordingly, qualified investors are offered two distinct investment opportunities:

   a) Become a founding investor in Axea LatinoCapital Partners SA, and/or
   b) Become a Limited Partner in each acquisition

Why Latin America?

Demonstrated Economic Stability

As reported in the Organization for Economic Cooperation and Development (OECD) Latin American Economic 2011 report:

    “The 2009 global economic crisis affected Latin American (LatAm) and Caribbean
     economies severely. However, despite Latin America’s high level of integration
     with International markets and its poor growth showing in 2009, several economies
     in the region displayed noteworthy resilience, reversing the downturn fairly
     quickly while performing well relative to economies elsewhere in the world.

     Major external factors contributing to this comparatively good performance were
     Chinese demand for commodities and timely monetary action of the international
     community. Nonetheless, this superior economic outcome was also the fruit of
     internal factors, such as improved domestic monetary and fiscal macroeconomic
     management on the one hand and prudential microeconomic regulation on
     the other”.

As a region with general macroeconomic stability, Latin America’s long-term growth prospects are promising. The OECD report also indentifies why Latin America has done comparatively better than other regions during the recent economic crisis.  While LatAm nations were tested during the 2009 downturn, most were able to deploy economic policy in a way which was both effective and sustainable. Sustainability, which means implementing policies consistent with the long-run evolution of external, fiscal and monetary balances, was a critical difference. The region proved able to protect its hard-won gains in growth potential and so its scope for long-term economic development.

 

Reported Economic Mobility

According to the International Monetary Fund (IMF) – Capital flows to emerging market economies have resumed from the sharp decline in the aftermath of the global financial crisis and are projected to remain high, in the coming years. These flows and capital mobility allow countries with limited savings to attract financing for productive investment projects, foster the diversification of investment risk and contribute to the development of financial markets.

The Emerging Markets Private Equity Association (EMPEA) released several press releases recently stating that 90% of the rise in both transaction volume and in total investment in 2011 can be attributed to increased investment activity in China, India and Latin America. Related to transaction activity; 44% more deals were completed in 2010 than in 2009 and remain on the rise, as well as tracking ahead of pre-crisis pace.

As reported by EMPEA: “Investment conditions in emerging markets private equity are revitalizing. There are more and better quality deals in the pipelines; continued easing of price expectations among sellers means private equity managers have been more successful in closing transactions. Emerging market fund managers are increasingly bullish in light of stabilizing markets and lower valuations. We’re seeing marked interest in the investment potential of regional opportunities. It’s encouraging to see the markets recognize the growth potential of Latin America”.

PRIVATE EQUITY OPPORTUNITIES INVESTORS WILL SEEK DURING THE 2010-2015 PERIOD

• 52% of Limited Partner respondents in a recent survey pointed to Small to Medium Enterprise (SME) Buyouts, over the next investment category of distressed private equity (20%)

• The highest PE returns in the last 10 years have been generated in emerging market SMEs

• The pendulum has shifted to the smaller end of the market and away from the large Mega- Buyout space

Source: PREQUIN

 

AXEA LatinoCapital Partners SA - Investment Opportunity

Originating, managing, leveraging, and exiting controlled buy-out transactions involving medium sized enterprises in Latin America.

•  Acquisition of at least (4) proprietary transactions by the end of the 2nd year of operations
•  Acquisition Funding -  Buy-outs are funded by Limited Partners (LP) through a Pledge Fund concept where a modest annual membership fee for the First-Right -of -Refusal on transactions will be paid to the Asset Manager
•  Minimum equity share of US $10 million (balance of acquisition cost consideration comes from debt leverage through national and international sources and from Washington DC based global multi-lateral banks).
•  Regional coverage, cross-border, low-cost operating structure utilizing Axea’s in-country partners

Advantage to LP’s:

•  No annual management fee applicable to LP’s. Axea believes in “Pay-for-Performance” – it will receive origination fees at the time of closing

Offshore holding company for each individual transaction creates tax efficiencies and flexibility for investors/shareholders

 

Investment Terms

•  Seeking total US $5,000,000

• Minimum investment of US $100,000 per unit

   •  $3,000,000 Series A preferred equity: 8% cumulative preferred Panamanian Limited Liability Company Interests representing 35% of outstanding Limited Liability Company Interests. Used for working capital and business expenses.

   •  $2,000,000 Series B secured notes: 10% secured promissory notes payable quarterly interest-only, all due in thirty-six (36) months. Interest payments deferred for first 18 months with trust account sinking fund. Average $500,000 per transaction for refundable deposits.

Seed investors of preferred equity will receive 100% return of their capital, preferred return of 8%, and 35% of the asset manager’s 20% carried interest in all transaction liquidity events.

 

Company Profile

Since 2005, AxeaGroup and Company, LLC a Washington DC based private equity advisory firm focused on Latin America, realized the “lower – cost” advantage of creating an “in-country” regional network of senior advisors.  It has identified, developed, and nurtured relationships with in-country nationals representing Axea in the origination of clients requiring private equity advisory services, as well as select proprietary private equity deals. 

 

AxeaGroup’s Affiliates Include:

•  Mexico – Investment banks, merchant banks, financial advisory firms, CPA firms, etc.
•  El Salvador – Previous banker for CitiBank, regional law firm, M & A advisory firm
•  Costa Rica – Prior Wall Street investment banker
•  Peru/Colombia – Factoring/leasing firm, generating proprietary deals, European M &A firm
•  Chile – Investment bank, law firm, private equity advisor
•  Argentina – Investment bankers
•  Brazil – Sao Paulo and Rio de Janeiro – PWC M& A Group, M&A financial advisors, ex-bankers

Axea LatinoCapital’s Operating Partners constitute a uniquely qualified, multidisciplinary cross-border team of senior professionals with an average of 30 years relevant individual experience, and have worked collectively together, or in the same organizations and in the region during the last 16 years. 

 

The Team’s Operating Expertise Includes:

•  Axea LatinoCapital’s Chairman is a former Executive Director for the United States of the Inter-American Development Bank appointed by Presidents Reagan and Bush, and former Head of AIG’s Global Asset Management Business from 2000 to 2005. His principal responsibilities will include oversight of the firm, head of the investment committee, and industry spokesman.

•  The Founder and Managing Partner booked 11 years of private equity advisory assignments, and brings 17 years of multinational corporate finance (Exxon, IBM and Sprint International ) experience in the US and Latin America. He will be responsible for investor and in-country network relations, operations and administration, and business strategy.

•  The firm’s Managing Director brings 15+ years in senior management and CEO roles involving Latin American operations, including 6 years in the Investments Unit of the Inter-American Development Bank, and in executive management and Corporate Development functions at Sprint International, and Lockheed Martin. His principal responsibilities include transaction due diligence and investment execution. 

Superior outside service providers include Price Waterhouse Coopers (PWC) as independent auditors, K&L Gates as External Legal Counsel, and the Gerson Lehrman Group, for Human Resource Consulting.

 

An Added-Value Proposition

Axea LatinoCapital Partners’ mandate is to leverage its team of Operating Partners in Washington DC and its senior “on the ground” in-country advisors; critical strategic resources to help originate investment opportunities and create and deliver value to portfolio investment companies. 

Axea makes acquired businesses more productive and competitive in their respective markets.  This enables Axea’s Buy-Out Team to increase EBITDA, preserve and create future jobs, and enhance shareholder value.

Operating Partners and in-country advisors are seasoned professionals, averaging over 25 individual years of operating experience with deep expertise in value-critical areas such as:

•  Strategic planning, corporate management and board governance
•  Superior financial management, reporting, and internal controls
•  Supply chain efficiency and procurement
•  Participative management techniques to stream line work flow and design
•  Sales and marketing audits to impact pricing and sales force optimization
•  IT systems management
•  Benchmark industry reporting standards and operating metrics accountability

 

Positioning

AxeaGroup will continue to expand the Latin American network of in-country advisors and investors and leverage international placement agents for origination and funding of future transactions.

Targeted future Limited Partners will represent:

•  Global Family Offices
•  Co-Investment Funds
•  Fund of Funds
•  Global emerging markets funds focused on Latin America
•  Frontier Country Funds – Argentina, Uruguay, Ecuador
•  Global Development Funds – Norway, Germany, Qatar, Abu Dhabi, Singapore, China
•  Sovereign Wealth Funds
•  Hedge Funds

Thank You for Your Interest

Genuinely interested parties are invited to consider becoming either Founding Investors in Axea LatinoCapital Partners SA - a Latin American Private Equity Asset Management Firm - or to participate as Limited Partners in the funding of individual acquisitions.

If interested please click the link below and we will respond to your inquiry. Kindly include all relevant contact information so that we may send you a Non-Disclosure Agreement.

For more information and a Confidential Investor Information Memorandum, click here.