Baring Partners Go South of the Border

Baring Private Equity Partners (BPEP) recently made two investments in a pair of Mexican companies named Consorcio Hogar SA de CV and Analytica. The plays were made through BPEP’s $67 million Baring Mexico Private Equity Fund LP, and Baring Latin America Private Equity Fund LP. The latter fund is a new vehicle for which BPEP plans to raise $250-$300 million. To date the second fund has closed on $40 million.

Consorcio Hogar is a vertically integrated housing development and construction company that specializes in the development and construction of low-cost housing in Mexico.

“We believe in the prospects of the Mexican economy, which is improving, and in the housing sector, where there’s a deficit,” said Carolos Vertiz, a partner in BPEP’s Mexico City office. According to BPEP, only 300,000 houses are built every year in Mexico, but there is demand for as much as 750,000 per year.

“The prospect for consolidation in this sector is also high,” he said. “Ten companies control 30% to 35% of the housing market, another 1,000 small developers have the remaining 65% of the market. There are a lot of economies of scale involved. It’s a matter of having the capacity to grow.”

Founded seven years ago in Guadalajara, the publicly-traded Consorcio Hogar has since expanded into 10 Mexican states including Leon, Puebla and Tlaxcala.

Baring has invested $15 million in the deal, representing approximately 28% of Consortio, thereby making BPEP one of the company’s main shareholders with two seats on its board of directors. The company also held a shareholders meeting in mid-June and approved a capital increase of up to $20 million at Ps. 5.75 per share.

BPEP, along with Latin American Enterprise Capital Corp. also invested in Mexican start-up Analytica, a financial information company.

Varel Freeman, senior partner at BPEP, declined to specify the amount of the investment but said it was “substantial.” The company plans to launch its service in Brazil, Argentina, Chile and Spain, with each particular site tailored to the local market.

Analytica, which Freeman described as “a Latin American Bloomberg,” stands apart from its competition in several ways, Freeman said.

“[The site is] comprehensive, proprietary, fastest, and it’s Web-based. [This last] makes the technology much more efficient because it relies on bandwidth and is faster to refresh,” he said.

Another major difference, he said, is that Zonafinaciera and most other financial services sites are consumer-focused.

“Analytica is focused on the professional. On brokers and other [As such,] it provides much more information than a consumer portal. For example, you can tell who is buying and selling. It also provides news and information feeds to other portals.”

BPEP, a subsidiary of ING Group, is a global private equity firm that manages $2 billion with investments in 140 companies. BPEP has two funds specific to Latin America that focus on growth-oriented companies.