Narayan AmmachchiBY STAFF REPORT
The Development Bank of Latin America (CAF) has agreed to pump $52 million into three Mexican venture capital funds with an intention of promoting small and medium-sized enterprises in the country.
The agreements were signed during CAF President Enrique Garcia’s official visit to Mexico City, where he attended the inauguration of Mexican President Enrique Pena Nieto.
Funding recipients are Mexico Fund of Funds II, Adobe Social Mezzanine Fund I and Evercore Mexico Capital Partners Fund III, in which CAF will make equity investments.
Garcia said CAF’s participation in investment funds is part of the institution’s policy of supporting SMEs in Mexico and Latin America. “This activity has a positive impact on economic growth, as this type of capital investment promotes the creation of new businesses, new products and services, jobs and the emergence of entrepreneurs,” he said.
Mexico Funds Fund II is managed by Corporacion Mexicana de Inversiones de Capital (CMIC). CAF will have a seat on the Fund’s investment committee in return for its $40 million investment.
Mexico Funds says its intention is to encourage the growth of venture capital funds in Mexico, often overlooked by independent investment managers. The VC’s structure allows the issuance of certificates of deposit, in which Mexican pension funds, AFORES, can purchase.
“Once it reaches its maximum size, the fund will become a catalyst for direct investments of more than $550 million in companies, as well as Mexican and Latin American projects with high development potential,” Mexico Fund stated in a press release.
CAF said it will also contribute with its know-how in the management of venture capital funds in Latin America.
The Evercore Fund – which has already invested in Volaris, Morepharma, Ike Assistance, Lipu Transporte – said it would focus on investing in companies with high growth potential in the Mexican domestic market.
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