By Laura Kreutzer
The Wall Street Journal

September 4, 2012 – Brazil may still be the blockbuster nation in the Latin American private equity market, but Mexico has quietly become this year’s sleeper hit.

Mexican private equity investment grew to $228 million during the first half of 2012, more than double the $84 million the industry invested in Mexico during the first half of 2011, according to data compiled by the Latin American Private Equity and Venture Capital Association (LAVCA). The number of deals nearly doubled during the same period to nine during the first half of 2012 from five during the same period last year.

Although the investment in Mexico still a mere drop in the bucket compared to the roughly $2.8 billion invested in Latin America overall during the first half of the year, Mexico was the second most popular destination for private equity investors in the region after Brazil.

“Investors have turned their attentions to Mexico as far less [penetrated] and a much cheaper market in terms of asset valuations,” said Cate Ambrose, president and executive director of LAVCA.

In June, LBOWire’s Jon Shieber reported on the growing private equity interest in Mexico as investors have grown more comfortable with the political climate in the country. Specifically, the article notes the performance of Mexico’s economy, the country’s close ties to the United States and a relative lack of experienced managers compared to other emerging market countries such as Brazil or China.

Ms. Ambrose of LAVCA added that she continues to hear about other deals “in the pipeline”, which should bode well for continued activity during the back half of 2012.

In August, for example, Nexxus Capital, one of the more active private equity investors in the country, took a roughly 39% stake in Maak Holding, which owns companies that commercialize marble, granite and other natural stones in Mexico. In July, Aureos Capital invested $10 million in Mexican clinical research organization, Investigación Farmacológica y Biofarmacéutica.