The GIC Group, a consulting firm based in Alexandria, Va., has raised approximately $50 million of a $100 million fund that will focus on agribusiness companies in Latin America.
The vehicle, which is managed by GIC – while Latin America Enterprise Fund, located in Coconut Grove, Fla., serves as administrator and strategic adviser – went to market eight months ago under the leadership of GIC President and CEO Richard Gilmore.
So far, the firm has rounded up capital from a mix of limited partners, including a multinational strategic investor, a financial institution, a couple of high-net-worth individuals associated with a Swiss financial institution and several endowments. Gilmore said he would like to attract more institutional investors to make up the other $50 million of the fund.
Although this vehicle, dubbed 21st Century Latin America Fund, is GIC’s first foray into private equity, Gilmore said he felt the management team had enough transactional experience in Latin America to embark on the effort. GIC, which calls itself an international firm serving the investment, finance, analytical and management needs of companies and organizations involved in agribusiness, biotechnology, and global trade, has done M&A work, an IPO and private placements with Latin American companies.
In anticipation of the fund, GIC spent a good part of last year developing a prototype portfolio. This involved doing preliminary due diligence on potential Latin American company targets and meeting with management teams. This process put several deals in motion for the firm, although none have been completed.
“We did this (the prototype portfolio) because we felt since we were new on the street that we should tell investors about our strategy and let them see more concretely what our investment story will look like,” Gilmore said.
GIC plans to invest in established Latin American companies within the agribusiness, food and agri-biotech sectors in Argentina, Brazil, Chile and Mexico. It will commit a minimum of $10 million per deal, but might also do sidebar investments, teaming with an institution that is not part of the fund. The group plans to take majority and minority stakes in companies, but would require super-majority rights in minority deals, Gilmore said.
Gilmore and his partners are bullish on the opportunity for agriculture deals in Latin America, especially given the recent regulatory and trade reforms which have caused a rash of restructuring, mergers, acquisitions and divestitures.
“Including the liquidity problem, these are all very fertile indices for a private equity fund,” he said.
Although overwhelmingly positive on the potential for deals, Gilmore is not ignoring the risks involved, he said.
“We’re trying to create a diversified portfolio that will be counter cyclical in nature to protect the core investments,” he said. “It’s a lot of hard work, but we’re in this for the long haul.”
GIC is not using a placement agent for its fund, but Gilmore is using people he has worked with in the past as referrals, and they will be paid a finder’s fee for their referrals. Also, the firm has identified three individuals with fund management and investment banking experience who will come on board once deal-making begins, Gilmore said.
A final close around $100 million is expected before year-end.
Contact Leslie Green.