Warburg Pincus Goes Big Into Brazil

In a deal that signals non-Internet investments may be on the rebound in Latin America, private equity firm E.M. Warburg Pincus & Co. recently invested $35 million in a Brazilian private logistics and package delivery company named ebX Express Brasil.

Warburg Pincus was the sole investor on the deal, which represents the private equity firm?s largest Brazilian investment to date. The actual commitment was split evenly between the $5 billion Warburg Pincus Equity Partners global fund, and the $2.5 billion Warburg Pincus International Partners, a non-U.S. global fund.

“This transaction validates the enormous potential of the private equity business in Brazil,” said Gary Nusbaum, managing director and head of the Latin American group at Warburg Pincus.

While Warburg Pincus has largely invested in the Internet over the course of the last year and a half ? including funding for such companies as StarMedia, Ideia.com, Connectmed.com and Submarino.com ? Nusbaum emphasized that his firm?s commitment to Latin America has not changed.

“We invested about $20 million in StarMedia in 1998, and sold part of our investment for $41 million on the public markets in November 1999,” Nusbaum said. “So we were able to use the profits to reinvest in the Internet. If you add up the amount we invested in the Internet, it equals about half of what we invested in ebX.”

Prior to StarMedia, Warburg Pincus made two investments in Brazil, one in pay TV and one in the telecom space. The firm has invested $100 million in Latin America since 1993, with 75% to 80% of its resources going into Brazil, as it has an office in São Paulo.

Regarding ebX, Nusbaum said the logistics company “is larger than everyone else in Brazil except the post office. They?ve built up a sales base of more than $50 million. They?ve been a consolidator ? they?ve bought five

or six companies over the last year or so. And they have great management.”

EbX was formed in March 2000 by ebX Capital Partners through the acquisition of several leading players in Brazil?s fragmented package delivery market. The company offers logistics, inventory management and express package delivery. It is the only private company with an air and ground network that covers more than 1,500 cities in Brazil, and it delivers about eight million packages a month, according to company literature.

The company will use the $35 million to make investments in infrastructure and technology, as well as to expand its network through acquisitions and the hiring of new staff.

Nusbaum said, “ebX has scale advantage, a platform, and now they have capital.” He added that, given Warburg?s five-to-seven-year timeline concerning exits, ebX “will be meaningful in size and profitability” so that either a strategic sale or an exit through the public markets would be feasible.

H.M. Werner can be contacted at .