Main Capital investment process decision relies on a different basis compared to the standard of the industry:
1
Industry
2
Risk
3
Investment
Parameters
Parameters
4
Business
Model
Model
5
Location
1
Industry
Instead of investing in traditional industries that have generated returns in the past, we are looking to invest in industries that we expect will generate attractive returns in the future.This is crucial, considering that most markets are at a breakpoint, because of the convergence of different factors, such as the pandemic, preference for the use of technology, new patterns of consumption, and changes in socio-demographics, amongst others. Specifically, we believe those deals (projects/firms) trying to escalate through the use of new technologies will deliver significant value to our investors.
2
Risk
In order to deliver a diversified portfolio to our investors, we look to invest 65% in stabilized projects (mature deals) with significant current revenue, and 35% in venture capital projects with great potential of significant future revenue.
3
Investment
Parameters
Parameters
We analyze different sets of parameters, for each one of 3 different phases of the deal:
Starting point parameters:
We invest in deals with attractive prices, measured by acquisition multiples.
Medium point parameters:
We invest in deals that will deliver attractive net income, in terms of current EBITDA for ongoing deals or high expected future EBITDA for new deals.
Ending point:
We invest in deals that will be easy to sell after some years at high prices, according to the most likely exit strategy.
4
Business
Model
Model
We advocate to invest in those firms with innovative ways to do things, in terms of their operational structure and attraction of customers, amongst others.
Firms with business models that allow them to reduce costs through vertical integration, that participate in markets with inelastic demands, and that can adapt to the new environment through the use of technology are examples of what we find interesting for our investors.
5
Location
Besides the traditional areas in which Private Equity Funds invest (the main urban areas of Mexico and the US, such as Mexico City, Monterrey, Orlando or New York), we leverage our knowledge of the specific dynamics of certain geographical regions, historically sub attended, but with high potential of delivering value because of its expected growth and specific comparative advantages (such as the northern and southern borders of Mexico, as well as the southern border and the west coast of the USA).