Member: General Atlantic
Executive: Luis Cervantes, Principal & Head of Mexico Office
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LAVCA spoke with Luis Cervantes, Principal and Head of General Atlantic’s Mexico City office, about the opportunity in Latin America and the importance of family offices, both as LPs in funds and co-investors.

Cervantes also discussed GA’s investment strategy in Mexico and how digitization, new regulation, and a growing number of entrepreneurs are creating a platform for fintech in the country.

We have invested over US$2.8 billion across 18 Latin American companies over the last ten years, and have completed eleven exits… Latin America has been one of our most successful regions globally over the past few years.

LAVCA: Please provide some background on General Atlantic. Describe your unique fund structure and investor base.

Luis Cervantes: Drawing from 38 years of experience investing in over 300 companies, General Atlantic (“GA”) is a global growth equity firm that partners with entrepreneurs, families, and management teams who are building a leading, high-growth business. The firm has approximately US$28 billion assets under management as of June 30, 2018. Our active, longstanding relationships with a concentrated group of capital partners — including family offices, endowments, foundations, and other institutions from around the world — are supported by a unique capital structure that is not dependent on fundraising cycles. Our collective GA team represents approximately 9% of our capital base — the single largest commitment — keeping us strongly aligned with our investors.

LAVCA: As a global firm, how and when did General Atlantic develop a platform in Latin America?

Luis Cervantes: GA made its first investment in Latin America in 2000. In 2008, GA opened its first Latin American office in São Paulo. In 2015, the firm opened its second Latin American office in Mexico City. We have invested over US$2.8 billion across 18 Latin American companies over the last ten years, and have completed eleven exits.  Today, we have eight investment professionals in Latin America – five in Brazil and three in Mexico – and six Senior Advisors – two in Brazil, three in Mexico, and one in Colombia. Latin America has been one of our most successful regions globally over the past few years.

LAVCA: What is the role of family offices in Latin America?

Luis Cervantes: Family offices play a leading role in all Latin American economies. GA has a long history of partnering with families, the majority of our global investors are families, and we have completed a number of successful investments with family-run businesses. In Latin America, we have several family offices as investors in our global fund, we have invested in over 10 family-run businesses, and we have partnered with a number of families in specific investments.

Family offices play a leading role in all Latin American economies.

LAVCA: You head General Atlantic’s presence in Mexico. Please talk about your background and experience prior to joining General Atlantic?

Luis Cervantes: I joined GA in 2013 and lead the firm’s Mexico City office, with a focus on investments in Mexico and across Latin America. During my time at GA, I co-led the firm’s investments in Clip, Grupo Axo, and Laboratorios Sanfer. I am currently a member of the board of directors for all three of these companies. I was also involved in our previous investments including Sura Asset Management and Santander Asset Management.

Prior to joining GA, I completed my M.B.A. at Harvard Business School, and worked at Advent International and UBS Investment Bank.  I also currently serve as an Adjunct Professor at Universidad Iberoamericana.

LAVCA: What strategic sectors does General Atlantic focus on globally and how is that reflected in your investment strategy in Mexico?

Luis Cervantes: GA focuses on investments across four sectors: Consumer, Financial Services, Healthcare, and Technology. We immerse ourselves in these sectors so that we can develop and capitalize on disruptive themes that create unique investment opportunities globally.

Applying our deep sector expertise, robust global network, and pattern recognition, we identify and aim to partner with promising entrepreneurs and companies that are poised to become future market leaders. This strategy applies to all of our regions, including Mexico, where we have investments in the Consumer, Financial Services, and Healthcare sectors.

LAVCA: Please tell us about your investment in venture-backed fintech startup Clip. What is General Atlantic’s view on the tech/fintech opportunity?

Luis Cervantes: In 2016, we invested in Clip, a leading provider of mobile payments solutions in Mexico. We are working with the company to make sure its organizational structure and technology platform are ready in order to capture the next phase of growth.

We are excited about the opportunity set in the Fintech sector in Mexico.  We believe the economy is digitalizing at a fast-pace, regulation is catching up, and a growing number of entrepreneurs are trying to increase penetration of financial services in Mexico through disruptive offerings.

We are excited about the opportunity set in the Fintech sector in Mexico.  We believe the economy is digitalizing at a fast-pace, regulation is catching up, and a growing number of entrepreneurs are trying to increase penetration of financial services in Mexico through disruptive offerings.

LAVCA: What other deals have you completed in Mexico?

Luis Cervantes: Some of our other investments in Mexico include (but are not limited to):

• Grupo Axo: One of the largest and fastest growing apparel retailers in Mexico operating over 500 retail stores, more than 4,100 wholesale points of sale in department stores, and several e-commerce sites. The company owns the exclusive rights to commercialize more than 20 leading international brands in Mexico, and also owns Promoda, a leading off-price retailer in Mexico which has 140 stores. We invested in Grupo Axo in 2017.
• Sanfer: One of the largest Mexican branded generic private pharmaceutical companies with a growing presence in Latin America. Since our original investment in 2014, the company has almost tripled in size driven by international expansion, the launch of new products, and the closing of over 24 add-on acquisitions.

LAVCA: What is the feasibility of exits in the next 1-3 years. Do you see an opportunity to list companies on local or US stock exchanges?

Luis Cervantes: While we cannot disclose any specific exit plans, we have previously exited five investments in Latin America through the public markets and believe the Mexican market has increased its depth significantly, and would welcome new issuers that are disruptive, growing fast, and leaders in large sectors.

…the Mexican [public] market has increased its depth significantly…

LAVCA: Why did you join LAVCA?

Luis Cervantes: As a firm, we are committed to the Latin American region and see huge growth opportunities in this market. We joined LAVCA to support and increase our network in the region, as well as to promote education, research, and advocacy for private equity in Latin America.