Ariel Blumenkranc
Advent International Mexico
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Detecting Investment Opportunities

Wed, 09/05/2018 - 12:38

Q: What role does Mexico play in the company’s global strategy?

A: Advent International has two investment programs: Global Private Equity (GPE), focused on North America, Europe and Asia, and Latin America Private Equity Fund (LAPEF), focused on Latin America. We believe that having a local presence is key to successful investing. For this reason, in 1996 we launched a dedicated investment program for Latin America. In Mexico, we have completed 24 investments and today have five companies in our portfolio: Gayosso, Invercap, Grupo Financiero Mifel, Viakem and Grupo Farmacéutico Somar. Somar, a leading generics and branded generics pharma company that we acquired in October 2017, is our first deal in the Mexican healthcare space.

In addition to Mexico, Advent International has Latin American offices in Brazil, Colombia and Peru. Regionally, we manage US$5 billion and our most recent fund, the largest private equity fund in Latin America, is capitalized at US$2.1 billion.

Q: What are the most relevant healthcare subsegments for Advent International in Mexico?

A: Pharmaceuticals, hospitals and diagnostic clinics are the three healthcare subsectors we have focused on in Latin America. That said, we are constantly analyzing investment opportunities in these and other healthcare segments. We typically invest in companies that have strong growth potential and are often leaders in their subsectors. We are flexible in the types of deals we do, from control to minority positions.

Q: What added value does Advent International offer through its transactions?

A: We believe we must bring tangible value to the companies we invest in. We offer a powerful combination of internal and  external resources to support management teams: the Deal Team, Operating Partners and Portfolio Support Group. The local deal team, which specializes in certain sectors, seeks investment opportunities, conducts due diligence and leads the deal from the initial investment to divestment.

Operating Partners are external industry experts who are typically former CEOs of leading companies or local business owners. The third team is Advent’s internal Portfolio Support Group, consisting of 17 people globally. They are functional experts and work closely with management teams to execute projects that bring substantial value to our portfolio companies.

During due diligence, we invest significant time, effort and resources to build a Value Creation Plan (VCP). This plan touches all the fundamental parts of the company and determines the key value drivers we should focus on. The three groups work seamlessly together in the creation and execution of the VCP.

Q: What has been the impact of Advent International in Mexico and Latin America?

A: We have several success stories in the Latin American healthcare industry. In the pharma space, our most recent transaction besides Somar is Grupo Biotoscana, originally a Colombian pharma company with a leading position in the specialty pharma subsector. In five years, through organic expansion and several acquisitions, the company doubled the number of countries where it has a presence. Additionally, in 2017 Biotoscana successfully completed an IPO on the Brazilian stock exchange.

Another example is Fleury, a leading diagnostic services provider in Brazil. Together with our partners, we designed a VCP based on operational efficiencies and organic expansion, which helped consolidate the company’s position as one of the market leaders in Brazil, with over 9 million patients and more than 150 patient service centers. During our investment, Fleury increased its EBITDA margin by 40 percent. These improvements translated into approximately 350 share price growth during our investment period.