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LAVCA in the News

Mexico: Latest Private Equity Hotspot

26 September 2013

(Financial Times) Mexico is having its day in the sun when it comes to private equity investment. After stock and bond investors it is now the turn of PE investors to flock to Latin America’s second largest economy.

Funds raised for private equity and venture capital investment in Mexico hit a record $879m during the first six months of this year, according to figures from the Latin American Private Equity & Venture Capital Association (Lavca). This compares to just $20m raised during the same period before.

More tellingly, Mexico accounted for 23 per cent of the total funds raised in LatAm during the first half, up from 1 per cent during H1 of last year. Brazil, although it still leads the region in PE fundraising with $1.3bn raised, saw its share of total LatAm fundraising dropped to 34 per cent this first half, from 45 per cent last year.

“The takeaway from these numbers is that Mexico has clearly become the flavour of the month,” said Cate Ambrose, president of Lavca. “There is a shift in PE interest away from Brazil and into Mexico and Colombia.”

The growing interest in Mexico is further underscored by findings from a separate survey published by Lavca and Coller Capital of 105 private equity investors around the world.

While only 15 per cent of LatAm-focused PE investors currently have money invested in Mexico-specific PE funds, 39 per cent of those surveyed said they expect to have exposure to Mexico funds over the next three years.

“Mexico-focused funds in particular are set to boom,” said the survey.

Having being long overlooked by PE investors in favour of other emerging markets like Brazil and China, what explains the sudden surge in interest in Mexico?