Nexxus Clinches CCD, Eyes More Funds

Private equity firm Nexxus Capital has closed a certificado de capital de desarrollo (CCD) transaction in Mexico’s local market, the largest to date from a private equity fund. The 2020 deal priced at MXP100 and raises MXP1.46bn for Nexxus’ fourth private equity fund, which invests in a wide variety of assets in Mexico over a 5-year period. Through the transaction, investors get 80% of the fund’s proceeds and Nexxus receives 20%, as long as the CCD buyers’ initial investment plus a 10% preferred return is met. The CCD was bought by 11 different Afores, private pension funds and family offices. Proceeds are for a fund following Nexxus’ normal guidelines – purchases of stakes worth $25-$45m in mid-sized companies with growth potential tied to Mexicans’ increasing purchasing power. No single transaction can be worth more than 20% of the fund. BofA-Merrill Lynch, Santander, and Ixe managed the transaction. Nexxus founding partner Luis Harvey tells LatinFinance there should also be an equal amount raised in via traditional channels for a fifth fund that co-invests with a fourth, drawing largely from investors in Nexxus’ previous vehicles. He says the CCD transaction took about 11 months from start to finish, compared to 18 months years for its previous private equity funds. “There was a learning curve for the executives at the Afores, and they are quick learners. Our expectation is that next time the process will be faster, but by how much I don’t know,” Harvey says. Among the most important factors speeding up the process for Nexxus was track record, he adds. The group’s second fund still holds $180m in Genomma Labs stock. It expects to close in April the sale of another business, Sports World, for $60m. Close to 30 CCDs remain in the Mexican domestic pipeline, though many are advancing at a sluggish pace, with institutional investors analyzing the new structures carefully. Those tied to private equity and infrastructure seem to be gaining most traction. Nexxus is the f