May 29 (Reuters) – Bain Capital LLC is contemplating a Latin America-focused investment fund in the next three to five years, one of its managing directors said on Wednesday, making it the latest private equity firm to consider such a move.
Buyout firms such as Carlyle Group LP and Advent International Corp have flocked to the continent, lured by its growing middle class as they invest primarily in consumer-related sectors, though also in healthcare, technology and financial services.
Private equity and venture capital firms committed $7.9 billion to investments in Latin America in 2012 – a five-year high and a 21 percent increase from 2011, according to the Latin American Private Equity and Venture Capital Association.
“I think after we do a couple of more investments, we may look down the road at doing a specific regional fund in the next three to five years,” Bain managing director Stephen Pagliuca told Reuters on the sidelines of the association’s Chile forum.
Bain closed the purchase of Telefonica SA’s Latin American call-centerbusiness, Atento, for an enterprise value of about 1.1 billion euros ($1.36 billion) in December. Pagliuca said that transaction encouraged Bain to consider more deals in the region.
“We take a kind of a toe-in-the-water approach and we expand from there. I think that our toe in the water in this region has been Atento,” Pagliuca said.
“We try to size the funds small so we can be selective. So even in Asia our first fund was $500 million and our first fund in Europe was $500 million, and our fund in Asia is now $2.3 billion… but I don’t think we have a specific range yet,” Pagliuca added, when asked about the possible size of a Latin American fund.
Last summer, Bain said it had completed fundraising for its second Asia fund, raising $2.3 billion, which included $300 million contributed by Bain executives.
Bain’s third European buyout fund raised 3.5 billion euros ($4.5 billion) in 2008.
In the absence of a specific fund for Latin America, Bain has the option to tap its North America-focused private equity fund. Bain has secured about $2.35 billion from investors for its latest flagship North America-focused fund, excluding a $600 million commitment from the firm’s fund managers, according to a regulatory filing released last month. The fund has a $6 billion target.
“We can take out as much as we need, but we’d probably bias the (North American) funds to be 80 percent to 90 percent North American, but that’s still a lot of capital because it will be a $6 billion fund,” Pagliuca said.
In Latin America, Bain would likely look at business sectors in which it is already active in the United States, Pagliuca said.
“Businesses that take advantage of regional scale in technology are interesting. We have a lot of expertise in healthcare so… we’re starting to look at some opportunities in healthcare and insurance,” Pagliuca said.
“We’ve done financial services, we own WorldPay in London. It’s the largest credit-card processor in the United Kingdom. So things like credit-card processing, we’ve looked at opportunities in Latin America,” he added.
With about $70 billion of assets under management, Bain is one of the world’s largest buyout firms. Its investments include retailer Toys ‘R Us, child care provider Bright Horizons Family Solutions and television network The Weather Channel.
The Boston-based buyout firm has eight offices on three continents, according to its website, including in New York, London, Munich, Hong Kong, Shanghai, Tokyo and Mumbai.