IFC creates Latin American equity fund
September 19, 2017 |
The World Bank's private sector division could raise $1bn to buy minority stakes in companies, says Irene Arias, the IFC's director for Latin America and the Caribbean
The International Finance Corporation (IFC) is building a dedicated equity fund to buy minority stakes in companies across Latin America, a director at the multilateral agency told LatinFinance.
"We have not set a target size, but I imagine that it will be at least $1 billion," said Irene Arias, the director for Latin America and the Caribbean at the IFC. "It will be primarily a private equity fund. The aim, in many cases, will be to help companies to do an IPO and find our exit through an IPO," she added.
The IFC will likely buy stakes below 20% but it could increase the percentage with other investments from its asset management company, Arias said. The average investment will likely last four or five years, she said.
The IFC's asset management division runs the $1.2bn China-Mexico Fund, which owns stakes in the wireless telecommunications developer Altan Redes and the oil and gas company Citla Energy.
"My dream for the new Latin American equity fund is to replicate the model of the China-Mexico Fund," Arias said. "It is the kind of active equity investment that we plan to do in the future."
The IFC will recruit international institutional investors for the new equity fund, she said. "It is one of things that attracts companies when we co-invest with a fund. They then start their own direct relationships with institutional investors that they would otherwise not have access to."
The IFC recently spent $90m for an equity stake in the Colombian pharmaceutical firm Procaps, but the money did not come from the new equity fund.
The agency previously invested $100m in Orazul Energy, a company owned by US private equity firm I Squared, with $50m directly from the IFC and $50m from the IFC Global Infrastructure Fund (GIF). The GIF also has investments in Aegea Saneamento and Internexa in Brazil and Pacific Infrastructure and Pacific Midstream in Colombia.