31517 - ALTA GROWTH CAPITAL MEXICO FUND II LP

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Summary of Investment Information

Project Number

31517

Company Name

ALTA GROWTH CAPITAL MEXICO FUND II LP

Date SPI Disclosed

Mar 5, 2012

Country

Mexico

Region

Latin America and the Caribbean

Projected Board Date

May 30, 2012

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Dec 21, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : May 30, 2012
Signed : Jun 19, 2012
Invested : Jun 26, 2013

Sector

Growth Equity Fund

Project Description

Alta Growth Capital Mexico Fund II, L.P’s (the “Fund”) investment strategy is to invest equity and to provide technical and management expertise to Mexican SMEs poised for growth, specifically in primary sectors: Health, Education, Financial Services and Logistics. It is proposed that IFC invests the lesser of $15 million and 20% of the total committed capital in the Fund. The Fund is targeting $150 million in equity commitments from investors. The Fund will target investments ranging from $10-15 million in several funding rounds. Investments will be equity or equity-like structures and may be minority or along with like-minded investors secure a majority ownership interest. The Fund may generate co-investment opportunities for investors. The Fund is launched as a follow-on fund to Alta Growth Capital, Mexico Fund, L.P. -Fund I, (Project No. 25352), a $75 million private equity fund of vintage 2007, and in which IFC committed $18.7 million.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	15.0

Development Impact

Alta Growth Capital Mexico Fund II, L.P. is targeting equity investments in 10-15 SMEs that will be supplemented with environmental, managerial and technical value addition. Private equity-sponsored companies often adopt management practices (in environment and social, financial control, cost accounting, quality control, corporate governance, legal structure and tax reporting) that are better than those used by their local peers. If Alta Growth is successful and delivers developmental and financial results for its investors, it may be able to launch successor funds. Examples of successful, well-run private enterprises will contribute to encourage foreign investment in Mexico. The Fund is expected to contribute to a vibrant and sustainable private sector that will improve employment, trade balance, and public finances in Mexico. Finally, by attracting new investors to the private equity asset class â??local pension funds, insurers and investment companies, the Fund will help these companies to achieve higher risk adjusted returns as well as the implied benefits that private equity brings into their overall portfolio. The IFC team will measure and report on the following developmental impact indicators: 1) percentage of funding disbursed, 2) net/gross financial return, 3) number of jobs created, 4) annual growth sales, 5) annual growth EBITDA, 6) launching of follow-on funds, 7) tax paid to local governments, among other indicators.

IFC's early support to Alta Growth Capital Mexico Fund II, L.P. is expected to encourage both local and foreign investors to invest in this SME Fund. IFC is a cornerstone investor in Alta Growth Fund I and Alta Ventures. Alta Growth Fund I is on its fourth year and its portfolio is performing according to budget. Given the continued difficulties in the fundraising environment, it is crucial that IFC support the team in Fund II and help it to achieve a critical size. IFC will: 1) invest in equity financing; 2) negotiate co-investment rights for IFC direct business; 3) provide/send a signal of approval to potential investors; 4) update and monitor that the Fund and portfolio companies abide by IFC's environmental and social (ESMS) and corporate governance standards. IFC has selected to support the Alta team because of their expertise in helping companies and entrepreneurs grow. IFC will monitor its catalytic role by tracking fund mobilization and will confirm the upgrade of the ESMS.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Not Applicable	Yes/No		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Under "Fund I" (Project No. 25352) the Fund Manager was required to develop an Environmental and Social Management System (“ESMS”) to ensure sub project compliance with IFC’s Exclusion List, host country Environmental and Social (“E&S”) laws and regulations, and the IFC Performance Standards (the Applicable Requirements). During appraisal IFC assessed the potential E&S risks and impacts associated with the new Fund's expected portfolio and sectors of investment, which may include Healthcare, Logistics, Consumer Goods, Food, Financial/Business Services, Education, and Housing, some of which may have moderate to significant E&S risks.

IFC also reviewed the Fund Manager's capacity to manage the expected E&S risks under IFC's existing E&S risk management framework for private equity funds. As part of the investment in Fund II, IFC will suggest adjustments to the ESMS to address the gaps identified during appraisal as well as the new E&S requirements that came into effect since the investment in Fund I.

The Fund will be required to: enhance its existing ESMS to ensure that its investments/activities are in compliance with the Applicable Performance Requirements; identify responsible, qualified persons to manage and implement the ESMS; and submit a periodic report to IFC.

IFC will review the implementation and performance of the Fund's ESMS for the first three projects and all Category A projects prior to the fund's investment, to ensure the fund's ESMR is adequate to assess and manage E&S risks.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
AGH	Mexico	L-AC - Other Plastic and Rubber Products (Including Polypropylene Bags, Housing Components, Containers, etc.)
Fruehauf de Mexico	Mexico	M-CD - Automotive and Light Vehicle
GEB	Mexico	X-XX - Other
Little Caesars	Mexico	F-AI - Other Food
Maskota	Mexico	Q-AA - Wholesale (Including Grocery and Farm Products)
Mexarrend	Mexico	O-FA - Other Non-Banking Financial Institution (NBFI)
EAS Holdings	Mexico	R-AC- Other Services (Including IT Enabled Services)
Extended Suites	Mexico	U-AA- City and Business Hotel
Taneglo	Mexico	O-FA- Other Non-Banking Financial Institution (NBFI)
Teletec	Mexico	X-XY- Other

Contacts

For Inquiries About the Project, Contact

Mr. Scott McDonough
Managing Director
Alta Growth Capital Management
Homero 440 - 9th Floor
Mexico DF 11560
Email: mailto:smcdonough@agcmexico.com

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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Online form: available at https://www.cao-ombudsman.org/
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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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