European investment firm Brummer & Partners has set up a $120-million private equity fund to look for opportunities in the Philippines, taking advantage of the country’s fast-growing economy.
The new fund, which will be called Navegar, will make long-term investments in the country, putting in about $10 million to $20 million in various companies in the consumer and service sectors. Navegar is the group’s second venture in an emerging market after a similar foray in Bangladesh in 2008.
“There are probably a lot of good opportunities in this country. The challenge for us is to pick the best ones,” said Patrick Brummer, co-founder of Brummer & Partners. Brummer plans to take minority investments in privately held companies and eventually exit after several years once that company goes public or is acquired by a larger firm.
He said the group’s ventures in emerging markets were part of a strategy to find new areas for growth amid the slowdown in advanced economies. Brummer, which manages $15 billion in funds globally, is headquartered in Stockholm, but has offices in New York, London, Singapore and Dhaka.
“I’d rather be investing in the Philippines than in the west in the next 10 years,” Brummer said, but added that the decision to come to the Philippines was not merely a reaction to the country’s recent economic success.
Brummer said the group took note of the country’s young population and relatively predictable economic growth. Talks with local partners to set up shop in the Philippines started five years ago and were finalized early this year, he said.
“We’re not starting this fund on the assumption that the economy would grow 7 percent for 10 years. Growth will not be a straight line,” he said. “But if the Philippines grows an average 5 percent, I would be very happy with that. What will it be for the next couple of years? That’s the million-dollar question,” he added.
Honorio Poblador, one of Navegar’s local partners who will manage the fund in the Philippines, said the group was in talks on potential investments in companies in the consumer sector, particularly in the food, apparel and retail industries.
He said the firm was also considering investments in consumer finance, real estate and the business process outsourcing (BPO) sector. One of Navegar’s local partners is Javier Infante, founder of Ambergis Solutions, the BPO firm that was eventually acquired by Canadian telco giant Telus International.—Paolo G. Montecillo