Advent raises decade’s largest Latin America fund

Advent International, a Boston-based global buyout firm, announced today that it has held a final close on $375 million for the firm’s third fund focusing on Latin America. With the new fund, Advent now manages $870 million of equity capital in the region.

Advent’s Latin American Private Equity Fund III (LAPEF III) is the largest fund raised in Latin America, not only for 2005 but also since the downswing in the region’s largest economies in 2001. Advent has stated that the fund will invest primarily in these larger economies, namely Brazil, Mexico, and Argentina.

According to a statement from the firm, Advent received high levels of interest for LAPEF III from both existing and new investors, including California Public Employees’ Retirement System, Morgan Stanley Alternative Investment Partners, British Columbia Investment Management Corporation, AlpInvest Partners, Deutsche Investitions- und Entwicklungsgesellschaft mbH, and the Netherlands Development Finance Company (FMO). Over half – or 53 percent – of the capital came from North American investors, while European investors provided 36 percent of the total, with the rest of the capital coming from investors in the Middle East and Asia Pacific.

Whereas the firm’s previous Latin America funds – the 1996-vintage, $230 million LAPEF I and the 2002-vintage, $265 million LAPEF II – made investments mostly in the $10 million to $25 million range, Advent Latin America chief executive Ernest Bachrach has indicated to the press that the new fund will make larger equity commitments, ranging from $30 million to $50 million.

Despite the larger capital commitments to be made by LAPEF III, Bachrach has stated that Advent’s investment strategy of acquiring “controlling stakes in growth businesses in our core sectors” will remain constant in Latin America. To date, Advent has already made two investments – in Uruguayan commercial bank Nuevo Banco Comercial and Mexican mortgage lender Hipotecaria Casa Mexicana – through the LAPEF III vehicle. Advent also expects to make another investment through LAPEF III before the end of 2005, according to a press release.

Last year, Advent made five investments, spanning the construction, services, and transportation sectors of Brazil, Argentina and Mexico. The firm’s Latin American operations are managed by 18 investment professionals, located among Advent’s local offices in Buenos Aires, Sao Paulo and Mexico City.

Advent International is not the only firm to have recently renewed its capacity to invest in Latin America. Darby Overseas also made a final close on a Latin America regional fund earlier this year, which raised $175 million since the fund’s launch in 2001. According to reports by Venture Equity Latin America, Greenwich Connecticut-based Southern Cross Group is also involved in ongoing efforts to raise $220 million to $250 million for its second fund targeting the region.