A New Day Dawning for Private Equity in Buenos Aires

Patrick Archer buenos aires events, competitiveness, foreign investment, franchises

The Reuters Latin America Investment Summit takes place this week in Buenos Aires with fund managers and regional analysts dishing on sector opportunities, country risk and private equity. One of the largest players in Buenos Aires private equity is Pegasus with a balanced portfolio of retail and real estate holdings.

After a turbulent decade, Pegasus President Mario Quintana feels like Argentina is turning an important corner for foreign investors seeking shorter-term exit strategies: “You could say that in the last 10 years we’ve gone through an unusually long cycle that’s not very favorable for exits. We are convinced that that is going to change a lot in the decade that’s starting now.”

With national elections looming in 2011, Quintana believes the next administration will be less interventionist and, in turn, capital markets will begin to mature to the level of regional rivals like Brazil and Mexico. Such a maturation would mean more local IPOs and broader sector representation on the Bolsa de Comercio de Buenos Aires where few retail and real estate companies are traded.

It’s a missed opportunity when you look at some of the fast-growing, strong brand franchises in the Pegasus portfolio like Farmacity, Musimundo and Freddo. Currently of the three, Quintana believes Farmacity could go public “not too far in the future.” The national pharmacy chain has over 100 outlets, 350 private label products and projected 2010 revenue of $500 million. More robust capital markets will be the perfect prescription for launching more Argentine IPOs and encouraging greater foreign investment in the coming decade.

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