PARTNER OF INVERLAT
Argentina 2017 I Finance I Interview
BIOGRAPHY With an Economics and Accounting BSc from the Pontificia Universidad Católica Argentina, he has extensive experience in the financial sector in Argentina being Vice-President of Citibank and ABN Amro and Managing Director of Deutsche Bank, he has been a partner at Inverlat since its creation in 2003.
“WE ARE LOOKING FOR COMPANIES THAT HAVE GOOD MANAGEMENT AND LONG-TERM VISION THAT NEEDS OUR SUPPORT TO ACHIEVE ITS OBJECTIVES.”
INVERLAT HAS 15 YEARS EXPERIENCE IN INVESTING IN LATIN AMERICA. CAN YOU TELL US MORE ABOUT YOUR INVESTMENT STRATEGY?
We have a return oriented and dynamic approach backed by a robust analysis and a consistent investment approach to capitalize on multi-sectoral market opportunities in Latin America. With our partner’s extensive experience and knowledge of regional markets, we have decided to establish Inverlat in 2003 to identify and execute investment opportunities based on a deep understanding of the local environment, looking for attractive advantages for our investors and clients. We have been able to create a successful portfolio of companies in the food, printing, sports and garments sectors.
Our investment return, unlike typical Private Equity Funds, is not based on exit. In Argentina and other Latin American countries, it is rather difficult to predict optimal exit timing, so we prioritize returns based on cash flow and financial structures that allow us to get our invested capital back before an exit takes place.
ONE OF YOUR MOST SUCCESSFUL INVESTMENTS HAS BEEN THE ACQUISITION OF DEGASA IN 2011. WHAT HAVE BEEN THE REASONS FOR THIS INVESTMENT?
Degasa Holding operates the master franchises of KFC, Wendys and China Wok in Argentina and Chile. Our vision is to become the largest gastronomic holding company in the southern cone. Our focus has been on developing the commercial and operational aspects of the brands under our control, positioning them in the most outstanding urban centers in each country and constantly searching for new projects in the gastronomic sector. We will invest USD 100 million to open between 25 and 30 locations per year in both countries over the next five years to reach more than 240 restaurants in the holding company by the end of 2021. Currently, Degasa has most of its business in Chile, where it operates 60 KFC locations, 20 Chinawok locations and will end the year with six Wendy’s establishments. In the Argentine market, meanwhile, it has 14 restaurants between KFC and Wendy’s. With this growth plan, we expect to finish 2021 with revenues of over USD 300 million in the holding company.
WHICH OTHER COMPANIES HAVE YOU INVESTED IN AND WHAT WERE THE MAIN REASONS BEHIND YOUR DECISIONS?
Our first investment was in Havanna, the second largest food retail chain in Argentina and one of the prime coffee chains in Latin America with 190 locations in Argentina and 70 in the rest of the world.We are also the master franchise for the distribution, commercialization and production of Reef -- one of the prominent surf apparel brands in the world -- in Argentina, Uruguay, Chile and Paraguay. We have also invested in ICSA, which is one of the top security printers in Argentina and Fenoglio, a leading Argentinian chocolate producer with a strong presence in Patagonia and also a provider for Havanna chocolate products.
In 2008, we invested in EDERSA (Empresa de Energía Río Negro) when the US-based company First Energy decided to exit Argentina. Although the regulatory environment was not friendly, we saw an opportunity and bought 50% of the company. We focused on improving the tariff scheme and restructuring the financial obligations of the company. In 2014, we identified an opportunity to exit and sold our stake to a local family office.
WHAT MAKES INVERLAT AN IMPORTANT PARTNER FOR BUSINESSES TO DEVELOP TO ITS FULL POTENTIAL?
One of the most important things we offer to the companies we invest in is professional management and working capital. We also work towards the improvement in the strategic vision of the business always searching for opportunities and alliances with other companies, consultants, auditors and lawyers. We have extensive experience in debt restructuring of companies in a situation of financial stress and we are able to offer our expertise in management and active monitoring. We are looking for companies that have good management and long-term vision that needs our support to achieve its objectives.
Our investor base is comprised principally of Argentine family offices for transactions up to USD 100 million. For higher transactions, we combine them with institutional investors based in the US or Europe. We are four partners with more than 30 years of experience doing business in Argentina. For anyone looking to invest in this country, we provide an ideal platform based on our combination of local understanding, longstanding board of directors experience on leading local companies and financial institutions, and our networking capabilities.