Mexico 2018 | FINANCE | COLUMN

TBY talks to José Luis Guerrero, Managing Partner, Gueca Capital, on the sector.

José Luis Guerrero

How has 2018 been thus far for private equity funds?

We are a search fund based in Mexico City focused on companies that are valued at USD10-50 million. We started in May 2017, and it has been an interesting time. We have seen opportunities in different industries such as healthcare, specialized retail, education, entertainment, and tourism. There are perhaps over 15 active search funds currently, either seeking opportunities or have just acquired something. Search funds are an interesting sector. They capitalize on the opportunities that are too small for larger private equities. Although there are a few private equity groups that are seeking smaller opportunities, the search funds cover a sector that was underserved in Mexico. We are optimistic about having a strong chance of finding something in 2018.

How much room is there in the market for more funds?

There is still a great deal of room. In the last few years, we have seen many search funds in Mexico; we are the second-largest search fund country after the US. There is a great deal of interest by recent graduates or professionals to create a search fund. Though, there are certainly many challenges in managing a search fund. Sometimes search funds run into each other in the same deal but as long as they reach out to their network and look for deals in other states, they will find something interesting.