Global private equity investor Warburg Pincus recently made its largest investment in Brazil, and Latin America, acquiring a minority interest in ebX Express Brasil. The target is one of Brazil’s largest logistics and package delivery companies, second only to the state-owned Brazilian Post Office.
Using both Warburg Pincus Equity Partners LP, a $5 billion fund that makes investments in the U.S. and abroad, and Warburg Pincus International Partners, a $2.5 billion fund for international investments only, the firm invested $35 million in ebX.
EbX, which services 1,500 cities in Brazil, was formed a year ago through the consolidation of five smaller packaging and logistics companies each with a different focus either by industry or geography. “We were attracted by the platform they’ve built, the scale they’ve built, and, more importantly, by the management team that they have,” said Gary Nusbaum, a managing director and head of the Latin America Group at Warburg Pincus. “They put the management team together essentially best of breed from the companies they acquired, so most of the managers at ebX were either founders or top management at the acquired companies.”
Also, joining the ebX management as chief financial officer is Wilson Olivieri, who was formerly chief financial officer with PageNet do Brasil, another Warburg Pincus portfolio company.
The terms of the deal were not disclosed; however, a source close to the transaction said that the Warburg Pincus purchased preferred stock and acquired a minority stake with two of the company’s nine board seats.
The capital from the investment will be used for growing ebX, mainly by building up the company’s network and infrastructure and by making acquisitions, said Nusbaum.
To date, Warburg Pincus has invested over $100 million in 10 companies in Latin America, including ebX, with the majority of those located in Brazil. “We focus probably 75% to 80% of our Latin America Group effort in Brazil, as measured by time, money, investment, number of portfolio companies [and] people,” said Nusbaum. “It’s important because it’s a top 10 world economy. It’s growing rapidly, and it’s welcoming private equity investment.”
As an early investor in the Internet market in Latin America – the firm invested in StarMedia in August 1998 – it saw all of the Internet business plans for the region. Consequently, the firm invested in four other Internet companies, but its focus also includes health care, technology, media and telecom. Its Internet portfolio companies include Submarino, an e-commerce company, Connectmed, an e-health company with business-to-business services, O Elefante, an Internet-based reminder service, and Ideia.com, an Internet incubator.
Warburg sold all but about 5% of its interest in StarMedia in 1999 for $40 million after investing $20 million the previous year, and with lesser success exited its investment in PageNet do Brasil, a Brazilian paging company, without a profit.
In other Warburg Pincus news, the firm is currently on the road raising a sequel to the U.S. and global fund, which is currently more than half invested, that carries a target of $5 billion (Buyouts, Feb. 19, 2001, p.1). Earlier this month the Washington State Investment Board said it would invest $300 million into the fund. Over the past 30 years, Warburg Pincus’ funds have returned 26% annually after fees.