Riverwood Capital plans to double Chilean IT firm Synapsis' turnover in the next five years by concentrating on its operations in Brazil, according to Francisco Alvarez-Demalde, director of the private equity firm that bought Synapsis in December last year for US$52mn.
According to the executive, Synapsis is one of the few Latin American companies that have presence in Brazil, with good margins. While the company also operates in Chile, Argentina, Colombia, Peru and Panama, it is still a relatively small player in the Latin American giant, Alvarez-Demalde said. As such, the growth focus will be on Brazil, especially when considering Synapsis' plans to double its turnover (which came in at US$142mn in 2009 and US$150mn in 2010) in five years.
Riverwood Capital is looking to the Brazilian market as a strategy to increase revenues. "The World Cup and the Olympics would be the main key activities for developing new opportunities; they show us that growth in Brazil in the next six years will be strong in the private and public sector," magazine América Económica quoted the executive as saying.
Synapsis provide IT outsourcing services, including IT infrastructure, SAP solutions, some business applications and some commercial systems to corporate and government clients.
"One of the things that attracted us to Synapsis was that the company has historically had a very low profile, but when you look at the technical quality of services, you see that it's good. That reflects that a company is very focused on what it does. In this context, depending on the opportunities that we see, we hope to complement our growth with certain acquisitions to help us continue the growth strategy," said Alvarez-Demalde.
Riverwood has plans to list Synapsis on the Chilean stock market and begin to grow using a more aggressive trade policy. "It's a midterm future opportunity for the company, and from there we will make the decisions. We have no current plan, but it's a pretty logical step in the coming years," said Alvarez-Demalde.
PLANS FOR LATIN AMERICA
In a recent interview with BNamericas, Alvarez-Demalde highlighted that Brazil represents a strategic market for Riverwood to develop in Latin America.
"We look at the Latin American region by sector first and second by geography. In terms of geography, we like regional companies. We like companies with a regional platform that can leverage their products and services across different countries even though each market is very different," he said. "We also like strong IT markets. Brazil is very attractive, but we also like the Andean region. We look at things in Argentina, and we have been working also in Mexico."
Last month, Riverwood and compatriot firm FTV Capital completed a US$15mn investment in Argentine IT solutions and outsourcing services provider Globant. Previous expenditures include a February investment in Brazilian data center company Alog.
Riverwood continues to actively negotiate its Latin American acquisition strategy with regional players. Annual revenues of target companies have to be higher than US$50mn, Alvarez-Demalde said previously.