The Investors' Club

Oct 1, 2001

Nearly all sources of conventional financing for Argentine companies have dried up. Several local financiers have come up with some new ideas for finding financing fresh management and talent for local companies.

As Argentine country risk rises above 1,800 basis points, tax revenues slump and wild rumors circulate daily regarding the government's ability to retain the decade-old currency board system, this may not appear to be the right time to consider longer-term investment opportunities. Yet moments of maximum desperation are often moments of great opportunity.

One trend in financing the country's struggling corporate sector is the emergence of a nascent management buy-out and buy-in market. MBO/MBI financing has contributed much to entrepreneurial growth in the US and the UK. Financiers and business people in continental Europe and in markets even further afield, such as in Singapore and Malaysia, are turning to these methods.

Argentina offers fertile ground for this activity. It has a mass of SMEs, many of which are family-owned and face serious financing and succession problems. The lack of a developed and...

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