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Member Profiles

An Interview with Mauricio Camargo, Altra Investments

13 July 2010

Mauricio Camargo, Director and Co-Founder of Altra Investments, an investment and management firm focused on the Andean Region and Central America, spoke with LAVCA about launching a firm and developing relationships with institutional investors.

LAVCA: Please give us some background about your firm. How many funds do you operate, and what is your geographic and sector focus, if any?  What are your assets under management?

Camargo: Altra Investments was launched in early 2005 as a principal investment and management firm formed exclusively to mobilize capital towards the Andean Region (focused mainly in Colombia and Peru) and in Central America. As of today, ALTRA manages 4 investment vehicles, the last of which –  APEF I –  is our first institutional fund.  In aggregate we currently manage approximately USD 185m.

Altra has an opportunistic investment approach, looking preferably to invest in established companies with proven business models, with substantial value creation potential resulting from operational optimization, accelerated growth, and/or an industry consolidation processes.

LAVCA: What is your background and how did you become involved with your firm? How does the background of the rest of your team differ?

Camargo: Together with Dario Duran we established Altra in early 2005 when the region was starting to recover from the economic downturn of the early decade.  At that time we firmly believed the region was poised for several years of continued economic growth, and that there was an interesting opportunity to be an early player in an industry that within the region was still in a very infant stage. 

From the beginning our firm has been focused on business building, leveraging the complementary background and experience of the two founders.  Personally, my background was mainly consulting, coming to Altra after eleven years at McKinsey & Company, while Dario brought to the firm ample experience as portfolio manager and operational executive with two leading regional groups: the Sanford group and Valores Bavaria, the diversified holding company of the Santo Domingo family in the region. 

In late 2008 as our first institutional fund was being closed, a third director, Jorge Kuryla, joined our team to lead our efforts in Peru.  Jorge joined after 5 years as COO and CEO of Peruvian blue chip companies, Cementos Pacasmayo and Textil San Cristóbal, respectively, and a prior consulting experience with McKinsey as well.

LAVCA: What strategies did you implement to raise your first fund?

Camargo: ALTRA started the formal fund raising effort for our first institutional fund in the second quarter of 2008. We made significant progress during 2008 with Colombian institutional investors and international development institutions, but as the economic crisis unfolded by October we very quickly understood that additional funding from international institutional investors was going to be very hard to come by.  At that time we opted to bring the fund to closure with USD 105m in commitments, and channel our energies solely on the adequate investment of those resources in an environment that was favorable to those with liquidity. 

LAVCA: Your first fund was backed by Colombian pension funds. What has been your experience in working with the pension funds as limited partners?

Camargo: Our initial investment experience was built by working directly with a wide base of private investors.  Consequently, the evolution towards an institutional model required several adjustments on our part.  This was done at the same time as the Colombian pension funds were also starting to get comfortable with the asset class and with the local regulation, which posed some interesting challenges at the time. 

Today, after 18 months of working with the local institutional investors, I can say that the industry standards continue to evolve significantly and today the industry fully operates under international standards. 

LAVCA: You have a special emphasis on investing in Colombia and Peru. What are your thoughts on the investment opportunities in these two countries?

Camargo: In these countries, we continue to observe a very positive macroeconomic and foreign investment dynamic that is ensuring continued economic growth, and observe a clear need of mid-sized companies to evolve, grow, internationalize and become more competitive.  In addition, the significant number of free trade agreements signed by both Colombia and Peru will generate the need for consolidation and formalization of various sectors.  We believe these dynamics, in the context of a continued shortage of risk capital in the region; will lead to a continued flow of attractive investment opportunities. 

LAVCA: In regards to Peru, ALTRA recently announced its second investment in the country with the acquisition of 51% of SEMIGLO.  What types of resources are you using to do deals in Peru specifically? Was a local office instrumental?

Camargo: We have been focusing on opportunities in Peru since the beginning of our operations as it is a natural market for us and one we know well from our prior professional experience.  In 2007, we made our first investment in Infarmasa, one of the largest pharmaceutical companies in Peru.  Given this experience and the explicit regional focus of our institutional fund, we opened our office in late 2008 with Jorge´s incorporation. We currently have three investment professionals on the ground.  Through this effort, we have built an attractive pipeline of opportunities, of which SEMIGLO is the first that is locally executed. 

LAVCA: As your most recent investment, what unique actions are you taking to add value to SEMIGLO from an operational standpoint?

Camargo: SEMIGLO is our most recent of the three companies in which the institutional fund has invested.  SEMIGLO is one of the leading mining services contractors in Peru, a sector that is growing very aggressively.  We are working jointly with the original founders and the management of the company to prepare it to accompany this growth which involves not only preparing the balance sheet through our capitalization, but also completely upgrading all the commercial, operational and financial processes and the organization.  Our plan is to take the company to USD 100m in revenues by 2012, coming from USD 30m last year. 

LAVCA: Is your fund fully invested? Do you have plans to raise another fund?

Camargo: We have currently invested half of our fund and, given the investment opportunities we are currently working on, we would expect to be fully invested by the first quarter of 2011.  A subsequent fund raising effort for second half 2011 is something we are considering, but at this time our energy is fully focused on the deployment of the funds we currently manage and the consolidation of the investee companies.

LAVCA: Are you anticipating any exits in the near future?

Camargo: Most of our portfolio companies are still in development phase and consequently it is early in the process to actively consider exits.  We would, however, expect to enter into that phase early this coming year. While we would hope to see potential capital market exits in the future, our investment cases all consider sale to strategic players as the preferred and most probable exit path.

LAVCA: You noted that Altra focuses on the Andean Region (Colombia/Peru mainly) and in Central America. Could you provide some insight into the types of opportunities you are looking at in Central America, the region’s advantages/challenges, etc?

Central America in aggregate is a market the size of Colombia´s.  The region is well integrated and every day there is more flow of goods, services and commercial activity between Peru, Colombia and Central America.  Consequently, we have been evaluating opportunities related to this flow – Andean companies wanting to enter the Central American market and vice versa – , as well as multi-country opportunities of certain scale within the region.

LAVCA: What is your long term strategy for investing in the Andean Region and Central America, say over the next 5 years?

Camargo: We do not envision significant changes in our firm strategy over the coming years.  We are currently more convinced than ever before that the sweet spot to investing in the Andean Region and Central America is to focus on mid-market opportunities within the USD 10m to 50m per transaction range.  We would, however, expect to grow in assets under management and be able to expand our investor relationships as international interest in Latin America beyond Brazil continues to grow.