SPECIFIC METHODOLOGY

Mexico 2018 | FINANCE | COLUMN

TBY talks to Francisco De Alba, Founding Partner, Prisma Capital, on the sector.

Francisco De Alba

Do you have a specific methodology to choose the companies you put money into?

We are generalists; therefore, we look at potential acquisitions in every industry. However, given my partner's and my own professional experience, we prefer businesses in financial services. This is where we can add the most value. We seek businesses that are service oriented so that they are scalable. We also look for niche companies where margins are better and there is less competition. Finally, we like businesses with recurring revenues, contracts, or customer base so that the business is more predictable.

Why are you interested in investing in financial services?

Our investment strengthens the balance sheet of companies, making them more valuable almost overnight. Also, we see a great deal of demand for the products offered by these companies. There is low bank penetration in Mexico at every level. The main source of financing for companies is still their suppliers, and it is incredibly hard for them to get a loan. Many non-bank lenders and debt opportunity funds have appeared to bridge this gap, providing SME and mezzanine debt products. This space has been left largely unattended by the bigger banks.