Transcript PE Funds for SME in Central America – Case studies of exits - LAVCA meeting, NY Oct 16, 2008

PE Funds for SME in
Central America
– Case studies of exits -
LAVCA meeting, NY
Oct 16, 2008
LIM is the Fund Manager of CASEIF and CASEIF II, PE
Funds for SME in all Central America

LIM is part of LAFISE, a regional financial group.

CASEIF I, US$ 10M of capital, incorporated in Oct 2000.

The investors of CASEIF I are MIF, NORFUND, NDF and
LAFISE.

CASEIF I executed 10 investments - 6 exists

CASEIF II, established in 2007, a PE Fund of US$ 35 M
of capital. The investors are MIF, NORFUND, LAFISE,
CAF, SIFEM, BIO and FINNFUND.

CASEIF II, 4 Portfolio companies and the first exit in
advance.

Focus on early and expansion stage- with fewer than
300 employees and less than US$ 10 million in
sales/assets.

Investment amount per company: US$ 250,000 up to
US$ 3.0 million, equity and quasi-equity.
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Main obstacles faced by SMEs, and Where we see
opportunities

Main obstacles:
 Lack of financing of long term for growing
 Access to international markets
 Lack of strategic/organizational planning

Where we see investment opportunities:
Regional
rollout
Expansion
outside the
region
High growth
sectors
Investment
Opportunities
Atractive
players for
strategic
acquisition
Import
winning
concept
EXIT
Grow
successful
model into
niche
markets
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Case study 1: Metrored in Honduras –strategic sale
Investment US$ 680,000
IRR 50%, 4 years
Buyer: Millicom International
Case study 2: Lactosam in Nicaragua – keep innovating
• Initially it was structured a leasing of all assets
by 12 months.
• After 8 months Sigma Alimentos of Mexico
is excersing its purchase option.
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Case study 3: Coleccion 2000 in El Salvador –protect
the downside
• Investment in convertible loan of US$ 1.28M
• The Company closed operations due to Chinese
competition and increase of raw materials
• CASEIF received in lieu of payment the land and
building valued in US$ 1.8M
• The plant was leased in Sep 2008 to Wal Mart
for a period of 12 months with a purchase option
The convertible loan allows:
 To generate income during the grace period
 Security for the loan
 Legal rights of a lender plus minority rights
 Time to evaluate a conversion or to extend
the conversion period
 Time to establish strong relationship with
sponsors
 A way of early exit
 To have the full upside
Banking model
Hybrid model
Convertible debt
Private Equity
model
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Case study 4: Arango Software in Panama – align
interest for exit timing since the beginning
- Corporate governance/corporate restructure
- Consolidated financial statements
- CMMI certification level 1, and advancing to
level 2
- ISO certification
- Company closed with annual sales of US$
8.5 million, net profit of US$ 1,600,000 and
EBITDA of US$ 2.0million.
- The company received a formal offer by a
multinational public company specialized in
software.
- IRR estimated 300%
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