In a landmark investment for Mexico, Advent International has led the leveraged acquisition of Controladora Milano S.A. de C.V., the country's largest discount clothing retailer, for US$200 million.
The buyout, funded with $110 million in equity and $90 million in debt, is Mexico's first private-equity-backed transaction in the middle market to use significant leverage based mainly on cash flow.
Since the banking crisis in the mid-1990s, the country's M&A market has been characterized by either smaller, all-stock transactions involving financial buyers or large acquisitions by major corporations using debt secured with assets. Milano marks the beginning of a growing trend of private equity firms using cash-flow-based debt to buy mid-sized companies.
Advent arranged a syndicate of investors to acquire 100 percent of Milano from an investor group led by Newbridge Latin America. The Advent-led syndicate includes funds managed by Capital International, BBVA Proyectos Empresariales and the Netherlands Development Finance Company (FMO).
Standard Bank of South Africa and Scotiabank of Canada co-led a group of top-tier Mexican and international banks in providing debt in the form of acquisition financing and working capital facilities.
The discount apparel market in Mexico is highly fragmented, with only a handful of specialized national chains such as Milano. A significant portion of the market consists of small regional chains and a host of single-store boutiques. Flea markets and informal commerce play an important role in catering to this segment as well.
20240830145952.gif)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
