Aconcagua Partners - 3 min read
Case Study | Soft Landing | Business Ventures
LATAM SaaS gains traction in the UK
Project details:
Year: 2019
Company: Spanish SME
Industry/Sector: Infrastructure
Target: Finance in LATAM
2 min read
Background
In the 90's, a large pool of Spanish companies started an internationalisation wave that for obvious reasons led to Latin America. There are several examples of companies that flourished in the region at the time; Telefonica, Repsol, Santander and Indra to name a few. These big wins in their CV gave them the courage to venture into other markets. Telefonica and Santander acquired operators in the UK, Repsol moved up north and expanded into the former URSS, etc. This success encouraged other smaller Spanish companies to start a similar road to internationalise their operations. Our Client ventured into LATAM almost a decade ago and expanded regionally providing turnkey solution for infrastructure projects in the region.
Problems
First problem: most of the contracts won by our Client are linked to infrastructure projects owned or sponsored by local governments. In good times, those links to local governments go smooth and become very profitable, but in turbulent times, most government led/sponsored projects are subject to severe delays in payments which translates into financial stress to most of the contractors and suppliers.
Second problem: the risk profile of many Latin American countries these days make raising capital more difficult and costly.
Our intervention
In order to reduce its cost of capital, our Client had decided to finance its activities in LATAM by a mix of debt and equity from local investors in the region who are more accustomed to the risk profile of their own countries.
We took this challenge as a pilot in 2019. Our main focus has always been helping companies to internationalise in he oposite direction. But we could see the point the client had, and we could also see the impact these projects made in the local communities. So we reached out to our vast network in LATAM and in little more that 8 months we helped this company tap into several investors and lenders in the region that are working to plug-in the financial needs of our Client at a fraction of the cost of capital they could get in Europe.
If you are a European company that wants to venture into a Latin American market, contact Aconcagua Partners. We are certain we can help you.
Case Study | Soft Landing | Business Ventures