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Impact of Private Equity at companies in Mexico: 26 success case studiesKPMG Mexico in collaboration with the AMEXCAP
#Capitalprivado2013@KPMGMEXICO@AMEXCAP
#Capitalprivado2013@KPMGMEXICO@AMEXCAP
2© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
Conditions in make Mexico attractive for PE investments
PE is known, and gradually more
accepted Need to increase productivity and
innovation
Several opportunities in growth sectors
Scarce credit for SMEsFavorable
demographics
Large (and growing) private
consumption
Open, export –oriented platform. Competitive adv of
21.3
Reform agenda
3© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
1 1 1 1 1 2 4 4 1 2 3 4 5 9 9 9 11
8 9 9 10 10 12 1516 17
1924
26
29 33
1 2 3 5 9
912
1920
20
23
27
2930
1 1
2 3 4 5
5
5
79
9
15
18211
$0.774$1.540 $2.248
$2.618 $2.960$4.138
$6.424
$10.494
$12.154$13.200
$15.784
$18.660
$21.376
$22.945
10 12 1418
2327
35
4449
54
66
79
89
99
0
10
20
30
40
50
60
70
80
90
100
$0
$5
$10
$15
$20
$25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Fund
Man
ager
s (GP
s)
USD
(Billi
on)
Private Equity Evolution in Mexico
Fund of Funds Infrastructure Private Equity Real Estate Venture Capital Alternative Assets Debt GPs
Fund raising continues to be strong
PE: Private Equity, RE: Real Estate, VC VentureSource: AMEXCAP with information to November 2012.
Total committed capital has grown at a 48.3% CAGR during 2000-2012
US$ 15.3 billion average per year during 2007 - 2012
CAGR accumulated capital 2000 – 2012: 31.9%
4© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
The KPMG–AMEXCAP study analyzed 17 + 9 case studies of successful PE investments
Success story FundYear of establishment of company
Year of investment
Year of exitYears in business when fund invested
Arabela Procorp 1990 1990 2007 0Arabela Carlyle 1990 2007 NA 17ARG Aureos Capital / Alta Growth Capital 2001 2008 NA 7ClickOnero Angel Ventures 2007 2010 NA 3Corporación EG (RuhRPumpen) WAMEX Private Equity 1979 2004 2011 25Docuformas Aureos Capital 1996 2008 NA 12Dufry Advent International Corporation 1865 2004 2013 139Genomma Lab Nexxus Capital 1996 2004 2011 8Homex Nexxus Capital 1989 2000 2005 11HTC Carlyle 1999 2005 2009 6IGS (venta portafolio industrial) IGS Group 1995 2002 2007 7Kendrick Darby Private Equity 1946 2005 2009 59Micel IGNIA 2008 2010 NA 2MM Cinemas Southern Cross Group 1981 2006 2008 25RedIT Latin Idea Ventures 1998 2007 2012 9Punto Clave New Growth Fund 2005 2010 NA 5Volaris Discovery Americas 2005 2005 NA 0SAE Towers Acon Investments 1996 2007 2010 11Screencast Latin Idea Ventures 2010 2010 2013 0IMC Advent International Corporation 2006 2008 2013 2Crédito Real Nexxus Capital 1993 2007 2013 14Carrot Venture Partners 2012 2012 2013 0Mexplus Puertos EMP Latin America 1990 2010 2013 20MRP Fondos I, II y III MRP 2005 2005 2013 0Banco de Tierra IGS Group 2011 2011 2013 0FINAE Adobe Capital 2006 2012 2013 6
5
Equilibrium point
Time
Late
Income
Creation Early Mid / Expansion Consolidation
Of companies at different stages within their life cycle
ArabelaVolarisScreencastCarrotBanco de tierraMRP
ARGClickOneroMicelPunto Clave
ArabelaARGDocuformasGenommaHOMEXHTCIGSredITIMCFINAE
Corporación E.GDufryKendrickMM CinemasSAE TowersCredito RealMexPlus Puertos
6 companies in creation stage 4 companies in
early stage 10 companies in mid / expansion stage
7 companies in consolidation stage
Companies in this graph equal 27 because two different funds invested in Arabela at different stages
6© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
$15,992.57
$75,885.70
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Ventas año base (año 0) Ventas último año (año 5)
Sum of sales of comapnies with PE investmentMillion pesos
Sum of sales of the analyzed case studies increased by 4.7 times
…..If compared to the 2.06 ratio observed for companies included in the IPC of the BMV in a similar period
The ratio of sales increase was significant……..
4.7 XVs. 2.06 X
Individual success case studies obtained ratios from
1.18 to 29.70
IPC: Mexican Stock Market IndexBMV: Mexican Stock Exchange
7© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
73.3%62.3%
50.5%41.5%
30.1%28.6%
25.2%22.5%22.0%
17.8%17.4%17.3%
15.9%13.3%
5.6%
0.0% 20.0% 40.0% 60.0% 80.0%
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
Company 7
Company 8
Company 9
Company 10
Company 11
Company 12
Company 13
Company 14
Company 15
CAGR of sales
36.54%
15.54%
CAGR Sales PE CAGR Sales BMV
With a notably superior CAGR
In individual cases observed CAGR’s ranged from 5.6% to 73.3%
Sum of sales CAGR of analyzed case studies was 36.54%
+ 21 % points
*Companies for which information was available.
8© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
$1,984.49
$12,305.36
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Year of investment Year of exit
Sum of EBITDA / EBT of companies with PE investmentMillion pesos
$366,484.97
$560,894.00
-
100,000
200,000
300,000
400,000
500,000
600,000
2006 2011
Sum of EBITDA / EBT BMV companies million pesos
For each peso generated as profit at the beginning of the period, $5.2 pesos were generated at the end
While the ratio for BMV companies was 1.53
The observed ratio for the sum of the profits was 6.2
6.2 X 1.53 X
9© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
44.04%
8.88%
CAGR EBITDA / EBT PE CAGR EBITDA / EBT BMV 182.9%93.9%
70.6%52.0%
46.6%46.6%
38.9%37.8%
31.7%21.9%20.7%20.5%17.4%15.8%13.4%
0.0% 50.0% 100.0% 150.0% 200.0%
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
Company 7
Company 8
Company 9
Company 10
Company 11
Company 12
Company 13
Company 14
Company 15
CAGR of EBITDA / EBT
With a substantially higher EBITDA growth than that of BMV companies
In individual cases, EBITDA CAGR’s ranged from 13.4% to 182.9%
The sum of profits experienced a 44.04% CAGR compared to 8.88% of BMV companies
+ 35.16 % points
*Companies for which information was available.
10© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
During the analyzed period the sum of employments of the success case studies grew at a 14.4% CAGR
369,200171,964
+ 197,236 new positions
Year of investment (year 0) 5th year after the investment
11© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
148
1,003
0
200
400
600
800
1,000
1,200
2008 2013
EBITDAMillon pesos
465.0
1,607
0200400600800
1,0001,2001,4001,6001,800
2008 2013
Interest incomeMillion pesos
Credito Real is an example of how a PE fund can accelerate goalscompletion and leverage growth
CAGR: 46.6%
3.46X Company: Credito Real
Year of establishment: 1993 by MABE (household appliances marketleader) and GE Capital
Sector: Household appliances finance
Funds: Nexxus Capital
Strategy: Preparation for IPO and leverage of growth
Impact: Income growth at 28.1% CAGR and EBITDA growth at 46.6% CAGR
12© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
0.0
92.0
0102030405060708090
100
2010 2013
EBITDA ScreencastMillion pesos
0.0
660.0
0
100
200
300
400
500
600
700
2010 2013
Revenues ScreencastMillion pesos
The Screencast case shows how an idea can turn into a sizeablebusiness with PE support
Company: Screencast
Year of establishment: 2007
Sector: Digital marketing in large formats (cinemas and mega screens)
Funds: Latin Idea Ventures
Strategy: Contracts negotiation + organic and acquistive growth
Impact: From a business plan to 660 million pesos in revenue and 92 millionpesos in EBITDA
13© 2013, KPMG Cardenas Dosal, S.C, a Mexican corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
The study identified qualitative impacts as well, that were consistently observed in the analyzed case studies
In addition to quantitative impacts, key qualitative improvements were observed that benefit not only the companies themselves but society in general
Human talent –attraction/retention
Corporate responsibility and
sustainability
Improved access to financing sources
Strategic planning
Performance enhancement and risk management
Market (expansion) consolidation Transparency
Corporate Governance
Q&A Session
www.kpmg.com.mx
01800 292 KPMG
#Capitalprivado2013@KPMGMEXICO
@AMEXCAP
Contact Information
Victor L. Esquivel
+52 55 52 46 8689
