Mezzanine Financing Comes to LatAm

Nov 1, 2010

Mezzanine financing is not as widely available from private equity firms in LatAm as in other emerging markets. This could start to change soon as both sides learn of the benefits.

by Taina RosaThere are very few private equity firms in Latin America that have set up mezzanine funds, but more are expected to join them as the availability of loans from banks remains somewhat difficult to get for mid-sized companies. Capital markets in the region are also gaining a higher level of sophistication.In a nutshell, a provider of mezzanine financing will usually take a minority equity position in the target company and structure the rest of its investment as a loan. "Mezzanine is a product between senior debt and pure equity," says Lucas de Beaufort, senior associate at Washington DC-based EMP Global, which has more than $12 billion in assets under management (AUM).Richard Frank, CEO of US-based Darby Overseas, which began offering mezzanine financing in LatAm over 10 years ago, says that at that time there was a shortage of corporate loan availability to mid-sized companies. "Those conditions are still...

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