CAF promotes Mexican SMEs through venture capital funds
- Three agreements are signed during CAF President Enrique Garcia's official visit to Mexico.
- CAF participates through $52 million investment in Mexico Fund of Funds II, Adobe Social Mezzanine Fund I and Evercore Fund.
MEXICO CITY, Nov. 30, 2012 /PRNewswire/ -- CAF –development bank of Latin America– signed agreements with three Mexican investment funds to promote SMEs, as part of a strategic alliance with NAFIN and other Mexican development banks. Funding recipients are Mexico Fund of Funds II, Adobe Social Mezzanine Fund I and Evercore Mexico Capital Partners Fund III, in which CAF will make equity investments.
For 18 years, Mexico has been pursuing a policy of promoting entrepreneurship, venture capital and SMEs, all areas in which CAF has vast experience in Latin American countries.
The three agreements were signed during CAF President Enrique Garcia's official visit to Mexico City, where he attended the inauguration of Mexican President Enrique Pena Nieto.
Garcia said CAF's participation in investment funds is part of the institution's policy of supporting SMEs in Mexico and Latin America. "This activity has a positive impact on economic growth, as this type of capital investment promotes the creation of new businesses, new products and services, jobs and the emergence of entrepreneurs," he said.
Equity investment in Mexico Fund of Funds II
The first agreement to be signed was on CAF's equity investment in Mexico Funds Fund II, which will be managed by Corporacion Mexicana de Inversiones de Capital (CMIC), formed by Nacional Financiera, Banobras, Bancomext and FOCIR, and whose mission is to promote investments in venture capital in Mexico.
The agreement was signed by CAF President Enrique Garcia; Nacional Financiera Director General Hector Rangel; and CMIC Director General Felipe Vila. The signing ceremony was attended by officials from the Ministry of Finance and NAFIN.
CAF will invest $40 million and will have a seat on the fund's investment committee. This is intended to encourage the growth of venture capital funds in Mexico, often overlooked by independent investment managers.
The fund of funds' structure will allow the issuance of certificates of deposit, in which Mexican pension funds, AFORES, can purchase.
Once it reaches its maximum size, the fund will become a catalyst for direct investments of more than $550 million in companies, as well as Mexican and Latin American projects with high development potential. Mexico Fund of Funds II will become a benchmark investor in the national market and will help maintain the high growth rate of the Mexican economy, as well as promote the implementation of international best practices in sustainability and corporate responsibility.
In addition to the equity investment, CAF also will contribute with its know-how in the management of venture capital funds in Latin America. It will also support the implementation of best practices in social and environmental protection.
Equity investment in Evercore Mexico Capital Partners III
The second agreement was the $10 million equity investment in the Evercore Mexico Capital Partners Fund III. The fund will focus on investing in companies with high growth potential and provide goods and / or services to the Mexican domestic market. This is the third Mexican fund to be managed by the Evercore firm, expecting to repeat its previous funds' success, which, among other investments, supported the development of flagship companies such as Volaris, Morepharma, Ike Assistance, Lipu Transporte. The fund will be a catalyst for direct equity investments of up to $150 million.
The agreement was signed by CAF President Enrique Garcia, Evercore Mexico CEO Pedro Aspe, and Fund Executive Director Alfredo Castellanos.
Equity investment in Adobe Social Mezzanine Fund I
The third agreement was CAF's $2 million equity investment in Adobe Social Mezzanine Fund I.
Adobe Social Mezzanine Fund I, L.P. is a venture capital and technical assistance fund that will make equity investments or buy subordinated debt in small companies or those in their early stages of growth, with a social and environmental focus. This fund seeks to support the early growth of companies offering products and services that have significant impact and improve the quality of life of a large number of people, with particular emphasis on underserved communities.
CAF's participation in Adobe Social Mezzanine Fund I will enable the Latin American financial institution to indirectly reach small and medium enterprises in Mexico, to help these companies grow with capital, advice, networking, management experience, best practices and other added value products offered by the Fund.
In addition to CAF's representative, the agreement was signed by Erik Wallsten, managing partner of Adobe Capital, Felipe Vila, representative of Mexico Ventures I and Gerardo Ramos, head of research and investment management at Promotora Social Mexico.
The mission of CAF,--development bank of Latin America--, is to promote sustainable development and regional integration, by financing projects in the public and private sectors and providing technical cooperation and other specialized services. Established in 1970, it currently has 18 shareholder nations –16 in Latin America and the Caribbean, along with Spain and Portugal– and 14 private banks, and is a major source of multilateral financing as well as an important source of knowledge in the region. More information at www.caf.com.