Latin America: Banc of America Equity Builds IT Services Co. for Latin America –

In a bid to succeed in the increasingly competitive, and increasingly Internet-driven, world of Latin American private equity investing, Banc of America Equity Partners Latin America recently launched a venture called Structured Intelligence (SI). The new organization has fast become the largest information technology services provider in and for Latin America.

As an “Internet I-Builder,” SI intends to provide Latin American corporations access to a range of IT services so that these companies can conduct business and provide company information online. It also helps launch new enterprises, overhauls existing dotcom businesses and creates systems to provide clients with business intelligence through data warehousing, data mining and knowledge management technologies.

“The world is changing. [Company] relationships with suppliers are changing,” said Jacques Gliksberg, managing director of Banc of America Equity Partners Latin America. “Companies need to develop an e-business and e-commerce strategy, but most of them don’t know what that means. In other words, how do you actually implement this process? [That is where] SI becomes value-added.”

Gliksberg added he hasn’t seen other companies in Latin America providing these services. “There’s no credible independent regional solutions integrator and I-Builder in the region,” he said.

SI is headquartered in Miami and also has offices in Brazil, Mexico, Argentina, Columbia, Venezuela, Peru, Bolivia, Ecuador and Belize. In 1999, it had combined revenues of $90 million.

Gliksberg said Daniel Vinoly, president and chief executive of SI, and other management team members previously led the acquisition and consolidation of seven IT companies in Central America and the Caribbean. That company was called GBM, and Vinoly and his team tripled its revenues to $150 million over a five-year period.

Banc of America Equity Partners, which provides direct equity and related investment capital for parent Bank of America, supplied the majority of the financial backing to SI, which in turn acquired nine companies between September and December of last year, Vinoly said. Although, he added, SI had already lined up the participant companies.

Gliksberg declined to say the specific amount Banc of America has invested in this venture, but did say it has been “a very large, very expensive undertaking.”

Cross-Border Mergers

SI acquired nine companies, each one located within one of six Latin American nations. This activity has included consolidating the operations of GMA and Internet Services in Argentina, Perotti Informatica and NV Consultoria in Brazil, EDP in Colombia, Spersa in Mexico and Cygnus IS and Grupo Computo in Venezuela.

“We assembled complementary companies and found them in different countries because Latin America is going through two different, very dramatic, changes,” Vinoly said. “The first is, the Web is being developed massively and there’s a technology jump, so there’s a need for [a company like] SI to step in [to provide Internet I-Builder services].

“And then there’s the globalization of the Latin American economies which have opened themselves up to world markets,” he added. “There’s a need to serve clients at the same place and at the same time. [Companies] don’t have time to go to several suppliers. We offer that combination: we know the technology and can be in several countries at the same time.”

Moreover, SI has established relationships with leading technology vendors in Latin America, such as Microsoft, Cisco, SAP, Siebel, JD Edwards, I-Planet, Open Market, Hewlett-Packard and Sun Microsystems.”

Miamification

“We’re predicting very aggressive growth of more than 20%, perhaps 30%,” Vinoly said. “Because the demand is bigger than the supply.”

Vinoly added he realizes his firm’s growth projections seem optimistic, especially as many industry analysts are predicting 13% growth in Latin American markets through 2003.

Eventually, Vinoly said he sees SI in the U.S. and Latin America as multinationals move their headquarters to Miami.

“I see our inroads into the States through alliances and mergers,” he said, noting that his target markets would be South Florida and South Texas.

In terms of a possible exit, Gliksberg said SI has “high appeal for both capital markets and a strategic [investor.]”

Banc of America has chosen to focus on infrastructure rather than dotcom companies, he added. “Very few dotcom companies have business plans that will have revenue and profitability in the near future. We’re investing in [Structured Intelligence] not because it’s Internet-related, but because it’s profitable.”

Banc of America Equity Partners has committed capital of $6 billion worldwide. Bank of America has total assets of $633 billion, making it the largest U.S.-based bank.