As former mid-market funds extend their deal size reach, opportunities are opening up in the space they have left behind.

The Latin American fundraising boom is showing every sign of continuing apace in 2008, with new players gradually filling the region's market niches. Aureos Capital is the latest contender to enter the field of play. The firm is raising its largest Latin American fund to date, but with a $300 million (€207 million) target, the fund will likely pursue deals under the radar of regional heavyweights like Advent International and GP Investments.

“You have many of the larger players now moving into larger deal sizes, which also presents good investment opportunities,” Aureos regional managing partner Erik Peterson says.“But I think that has opened up the playing field in the mid-market sector, and from what we've seen so far there are many opportunities there and not many investment managers going after those opportunities.”

Aureos Capital held a first close on $140 million in mid-January. The fund will make investments of between $2 million and $10 million in Mexico, Central America and the Andean region, primarily in companies that stand to benefit from free trade agreements such as NAFTA and CAFTA.

“Our fund is going to be focusing on sectors that should benefit from the growth that the region is experiencing right now,” Peterson says. “Much of that is driven by free trade agreements, increased global and intra-regional trade, the ageing US population…and the fact that Latin America has a relatively young population that provides products for the US and other parts of the developed world.”

In early February the fund closed its first deal, the acquisition of a 31.25 percent stake in Mexican office equipment distributor Docuformas for $10 million. Founded in 1996 by former Xerox chief financial officer Adam Wiaktor, Docuformas has become the largest distributor of Xerox products in Mexico. The company also distributes Hewlett Packard products and, to a lesser extent, medical equipment – a small part of Docuformas's business that Peterson says Aureos hopes to grow.

Docuformas fits into Aureos's stated investment strategy well, Peterson says, because its clients are mid-sized local companies, one of the fastest growing market segments in Latin America. The deal was also attractive because under current law banks in Mexico are only allowed to issue financial leases, not operating leases, limiting Docuformas's competition. There are also tax benefits in Mexico for companies that lease equipment as opposed to buying it.

The majority of Latin American private equity fund managers expect to feel little impact from the credit crunch, according to a KPMG survey. While 55 percent of the 140 managers interviewed said there could be “ripple effects” as US investors reassess their priorities, only 21 percent said they expected these effects to be significant. “Latin America PE investors remain wary, but apparently are not overly concerned about the effect of the US market, mainly because there is still good availability of funding for the small- and medium-sized deals that comprise the bulk of their portfolios, and because subprime debt is not a factor in the region,” said KPMG partner Jean-Pierre Trouillot.

Global Infrastructure Partners (GIP) has agreed to partner with international port operator PSA International to acquire a majority stake in International Trade Logistics (ITL), a company that operates the second-largest container terminal in Argentina, for an undisclosed amount. ITL is the latest addition to GIP's ports vehicle, International Port Holdings. GIP bought International Port Holdings from founder and industry veteran Alistair Baillie in June 2007, with the goal of making the business “a platform for making small and mediumsized port investments and a centre of expertise to support GIP's investment objective of gaining critical mass in the ports sector”, GIP said.

Advent International has promoted 17 members of its team globally, including five members of its Latin America team. Joaquín Mandachain and Mario Malta have become senior associates, Frederico Brito e Abreu, Wilson Lourenço da Rosa have become principals, and Jorge Maluf has become an associate. The promotions come just over six months after Advent set a regional fundraising record with a $1.3 billion Latin America buyout fund, the firm's fourth.

Hicks Trans American Partners (HTAP), a subsidiary of Tom Hicks' private investment firm, has struck a deal with Greg Norman Golf Course Design for the Australian entrepreneur and golf professional to design an 18-hole course at El Desafío Mountain Resort. Located in Argentina's Patagonia region, the 1,050-hectare (2,500-acre) luxury resort community is being developed by HTAP in partnership with Terra Patagonia, a Buenos Aires-based firm that invests in and develops Patagonian land with a focus on preservation. Norman, who has won 20 US PGA Tour titles and two British Open Championships, began designing golf courses in 1987 and frequently partners with private investment firms.

The UK's CDC Group has committed $180 million (€123 million) to four Latin American private equity funds: the Actis Latin American Private Equity Fund II and Patria's Brazilian Private Equity Fund III, which both target Brazilian mid-market companies, as well as the Aureos Latin America Fund, a pan-regional vehicle foccused on small and medium sized enterprises, and the Advent Latin American Private Equity Fund IV, which closed on $1.3 billion in July 2007 and will be invested predominantly in Mexico and Brazil.

Energy specialist First Reserve Corporation will partner with Netherlands-based tank terminal operator Royal Vopak to acquire Bahamian oil terminal Borco. First Reserve has agreed to acquire the terminal from Petróleos de Venezuela for $900 million, and will sell a 20 percent stake to Vopak. Vopak will operate the terminal after the deal's close, expected in the second quarter. The terminal is the largest oil storage facility in the Caribbean, with seventy-three oil tanks of different sizes, with a total capacity of more than 3 million cubic meters and expansion up to 5 million cubic meters for storage of crude oil, bunker fuel oil and various other petroleum products.

Brazilian private equity firm GP Investments has issued new shares on Brazil's stock exchange, Bovespa. GP Investments issued 1,020,361 A preference shares, including 432,192 shares in the form of Brazilian Depositary Shares (BDS), at $14.75 per share, raising a total of $15 million. The firm is also listed on the Luxembourg Stock Exchange. The equity offering supplements a $1.3 billion private equity fund the firm closed last October.

Banco do Brasil Investimentos and Portugal's Banif have created a R$600 million ($344 million) private equity fund to invest in Brazil, according to Brazilian economic journal Valor, which cited executives from both firms. The fund will invest in companies with revenues between R$300 million and R$800 million, particularly those looking to list on the stock market. The fund will seek to buy roughly 20 percent stakes in each company.

InterGen, a global power generation company jointly owned by AIG Highstar Capital and the Ontario Teachers' Pension Plan, has added two Mexican power plants to its platform in a $304 million (€207 million) transaction. The assets were purchased from Canadian energy company TransAlta and consist of Campeche, a 252-megawatt facility in the Yucatan Peninsula, and Chihuahua, a 259-megawatt facility in the Juarez border region. Each began operating in 2003 and has a 25-year contract with national utility Comision Federal de Electricidad, according to a statement. Teachers' and AIG Highstar purchased InterGen in 2005 from subsidiaries of the Royal Dutch/Shell Group and Bechtel Group in a transaction that was valued at roughly $1.75 billion.