(Dow Jones) Mexican lower midmarket firm Alta Growth Capital is on pace to exceed the $150 million target it set for its second fund, according to a person with knowledge of the firm’s plans.
Alta is one beneficiary of an increasing interest by limited partners in private equity across Latin America, as they expand their geographic sites in the region beyond their initial port of call in Brazil.
The firm looks for companies with between $10 million and $100 million in revenue, investing between $10 million and $20 million in each portfolio company.
To date, the firm has invested in five companies: Aplicaciones Medicas Integrales SA de CV, a health-care services company known as Medicus; parking lot operator Operadora Central de Estacionamientos SA de CV, also known as Central; marine fuel distributor Bunker’s Group; Grupo ARG, a provider of financing and services for automotive fleets; and Amerimed Hospitals, a hospital chain catering to Mexico’s tourism industry.
The Mexico City-based firm raised $75 million for its previous fund, Alta Growth Capital Mexico Fund LP , in 2009.
Mexico’s private equity market is poised for explosive growth over the next few years, according to a September report released by Bain & Co . Annual fundraising in the country has risen nearly six times since 2008, to $2.9 billion in 2012, and the number of general partners has doubled to 71, according to the Bain report. Compounded annually, private equity fundraising in Mexico has grown 56% over the past four years, compared with 4% in Asia and 2% across the rest of the world, not including North America and Europe.
Like other private equity investors in the country, Alta sees opportunities in the country’s rising labor force, which is expected to grow by 10 million over the next 15 years, and its emerging middle class, which will double to about 18 million households over the same period, according to the Bain report.
Furthermore, Alta invests in the area of the market with the largest pool of potential targets. There are roughly 48,000 small and medium-sized businesses in Mexico, according to Bain, compared to around 7,000 medium-to-large-sized companies.