Felipe Vilá
Director General
Fondo de Fondos
View from the Top

Pioneers Have Funding Impact

Sat, 10/01/2016 - 14:26

Q: What impact does Fondo de Fondos have on the companies that receive its support?
A: We participate in 74 private equity and venture capital funds, some specialized in the energy sector and others in real estate and infrastructure. We have committed a total investment of US$900 million, of which we have already invested US$700 million. Our impact can be measured through something called multiplier effect: how much money companies receive and how many times this amount grows through the intervention of other investors. The 74 funds in which we invest have already raised more than US$14 billion, which means that our US$900 million generated a multiplier effect of 15 times.
About 72 percent of the capital raised by the funds in which we have invested comes from abroad, 7 percent comes from us, Afores contribute between 15 and 16 percent and the remaining 4 percent comes from Mexican investors.
The multiplier effect is calculated by dividing the total investment made in a company by the amount invested directly by Fondo de Fondos. We have invested in more than 580 companies, we have active investments in 412 companies and we have accompanied 10 companies on their public offers. According to AMEXCAP, when comparing companies that have received private capital versus public companies, the first grows more. We have supported the creation of 112,000 direct jobs and almost 200,000 indirect jobs.
Q: Why do companies with private capital tend to grow more than public companies?
A: When private capital finances a company, it assumes greater risks than banks. This is because the funds tend to invest the social capital directly into companies, which has a positive impact on financial statements and does not boost the liabilities of those companies.
Private equity funds tend to be committed to their own investors to ensure high return margins, meaning that when there is an investment in a company, the fund must work intensively with that company to achieve higher sales. Funds also work to incorporate good administrative and financial practices, as well as the creation of corporate governance. Fund managers can also take part in the company’s Board of Directors and in decisions, something that cannot be easily managed in a public company. Private capital participation also has a positive impact on the company’s transparency and accountability.
Q: In over 10 years operating in Mexico, what has been Fondo de Fondos biggest challenge?
A: During the first five years of our existence, we were the only institution of our kind. Fondo de Fondos was created from four different federal development banks: Nacional Financiera, Bancomext, Banobras and FOCIR. These banks began to invest in companies and realized the impact they could have. For this reason, it was decided to create Fondo de Fondos, which was intended to provide continuity on long-term investments. Today, we are active investors and are always looking for mechanisms to improve the ecosystem while designing processes and legal structures to promote the private equity industry.
We have dedicated the last five years to consolidating our business and strengthening ourselves through the establishment of a modern corporate governance, good practices, a code of ethics and process manuals. In the past five years, we have managed to raise US$110 million from different investors, as well as MX$15 million from pension funds and insurance companies through the issuance of four different Structured Equity Securities (CKDs). Such is Fondo de Fondos’ recognition that international investors ask us for recommendations regarding funds in which to invest their assets. We have become a one-stop shop for those wanting to enter the Mexican private equity segment. We are an independent fund with no particular agenda.