Deals

Mexico launches third agribusiness fund – exclusive

The Mexican government is anchoring its third Agribusiness Capital Fund, targeting $100m. It hopes to launch a separate fund to attract foreign private equity funds at a later date.

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The Capitalization and Investment Fund for the Rural Sector (FOCIR), the Mexican government institution charged with promoting investment into the agri industry in Mexico, is about to launch Agribusiness Capital Fund III (Fica III) after it finalises the final investment of Fica II.

Fica II, which is about to make its final investment, is around $80 million in size whereas Fica I closed on $100 million at the end of 2013.

Fica III is targeting $100 million, of which 35 percent will be committed by the Mexican government. The remainder will come from the Mexican private sector and in some cases state governments; all capital is committed on a deal-by-deal basis, according to Luis Alberto Ibarra, director general at FOCIR.

“Many of the investors are also the agribusinesses targeted for investment,” said Ibarra, “They are keen to invest alongside the government.”

In the medium term, FOCIR, the funds’ GP, also hopes to establish a fund that would attract commitments from private equity firms and other institutional investors including from overseas, according to Ibarra. The size or expected time frame on this offering has not yet been decided.

“We would love to attract some foreign capital and I think with our track record the offering could be interesting for other private equity firms,” he said.

Fica III is most likely to deploy the $100 million across eight to 10 medium-sized agribusinesses from the processing end of the value chain; the fund does not invest into primary production. The fund has a 10-year life and the manager charges 1.5 percent on invested assets and a performance fee of around 15 percent but dependent on each project. An independent committee of agri experts has to approve each investment, added Ibarra.

The Mexican government is planning to channel investment to the country’s farmers in a separate initiative that will be presented to congress in due course, according to Ibarra.

FOCIR also manages five other smaller funds that target more specific areas of agriculture such as logistic, or specific regions in Mexico such as the Southeast. “They feel more like venture capital funds,” said Ibarra.

The organisation has total assets under management of around $500 million, he added.