Latin America’s Biggest Travel Company, CVC Corp. Plans for LatAm Expansion, Amazon Kicks Off Localized Payments in Chile with dLocal, Chile’s Screen Capital Launches $20 Million Film-TV Venture Capital Fund, and More

Other featured stories include: Glovo Drops 2 Latin American Markets, H&M to Enter Panama in Late 2020, €10 billion Offer to Take Majority Control of Telefonica LatAm, and a Video Interview with Aiva’s CEO Elizabeth Rey on Latin America

Latin America’s Biggest Travel Company, CVC Corp., Plans for LatAm Expansion

While Despegar and have become household names for finding online travel deals in Latin America, the biggest travel company by bookings in the region is a lesser known name: Brazil’s CVC Corp.

Established in 1972 as Agência de Viagens CVC, the group has since grown into a parent company with several brands offering everything from cruises, car rentals, hotels, flights, and all-inclusive packages. While the company has immense exposure in Brazil, the name isn’t as recognizable to many travelers in neighboring Spanish-speaking countries. This is changing, however, as the company has made key international acquisitions and is executing a plan to become more digitally focused.

CVC has made several acquisitions recently, including a move to buy 60% of Argentina-based travel companies Avantrip, Ola, and Biblos Travel in 2018.

As reported by Skift, the most transformative deal is the $77 million acquisition of Buenos Aires-based Almundo, which CVC subsidiary Submarino Viagens closed in November. The transaction closed just about a year after Spain’s Iberostar Group increased its stake in the Argentine travel company to 75%.

“Almundo, which provides services in Argentina, Colombia, Mexico, and Brazil, recorded $60 million in net revenues and $425 million in reservations during 2018, according to a CVC filing” (Skift).

Almundo will give CVC an advantage in the competitive Argentine online travel market. The Brazilian company said the purchase will double its reach in the country.

The Almundo acquisition will give CVC accessibility to the “omnichannel” sales platform the company has been developing for years. Under this model, Almundo provides services via physical travel agency offices, call centers, and online to reach all types of customers.

Almundo CEO Juan Pablo Lafosse told Skift that Almundo is a “key piece in this transformation” of CVC to become more digitally focused, and that the two companies are highly complementary.

Amazon Kicks Off Localized Payments in Chile with dLocal

On Tuesday, dLocal, an award-winning fintech company that specializes in cross-border payments for emerging countries, announced that Amazon went live with dLocal’s local payments acceptance services in Chile.

“Amazon has a long history of pioneering online innovation and bringing e-commerce to the rest of the world… We are honored to enable Amazon customers in Chile to shop on with international and domestic credit cards, including interest-free installments and Amazon Prime Video subscriptions in Chilean Pesos,” said Sebastian Kanovich, CEO of dLocal.

Payments infrastructure in Chile (and other emerging countries in Latin America) is fragmented and complex, and companies that enter these countries without the ability to accept locally-relevant payment methods could be unintentionally limiting their reach and hindering potential growth.

dLocal’s solution enables some of the world’s most innovative companies to gain a competitive edge in emerging countries. The company has been developing deep expertise in each local country it serves.

Business Wire reports that “[dLocal’s] flexible, next-generation payments technology platform supports over 300 local payment methods under one friendly, easy-to-use API.”

dLocal’s platform operates as the local merchant of record on behalf of its clients, speeding time-to-market and minimizing operational costs. It also provides built-in, value-add services including automated currency conversion, guaranteed fund repatriation for settlement in the United States or Europe, optimization of local payment operations and other localization-related advisory.

Chile’s Screen Capital Launches $20 Million Film-TV Venture Capital Fund

As demand for premium Spanish-language content continues to outrun supply, Chile’s Screen Capital is launching a $20 million venture capital fund targeting principally TV series and movies with part streaming platform distribution.

This will be Chile’s first private investment fund specializing in the audiovisual and entertainment sector, and is looking in principle to focus on productions from the Spanish-speaking world. The fund, Screen Capital, will launch in March.

Based out of Santiago de Chile, with additional members and collaborators in Argentina, the U.S. and the Dominican Republic, Screen Capital investments will average around $2 million per title. The fund intends to either co-produce, invest, or offer credit lines to productions.

As reported by Variety, Screen Capital launches as Latin American and Spanish producers face broadly two business models. One is “work-for-hire for platforms in an international environment, where they buy all rights and fund 100% of production costs”. The second- “co-production- is when production companies work as studios, and source co-funding in other countries from other channels, networks and local operators, where no one owns 100% of the IP and platforms buys a stake in shows.

“Our rationale is that there is an escalating demand for customized regional projects, from established and new platforms, which are looking for ever more content in Spanish with a local flavor, but producers do not more flexible tools allowing them to take advantage of this demand,” Zylberberg said.

In Latin America, streaming platforms often part-finance against select territory rights. OTT players also pay after two-to-three years, Zylberberg told Variety. By employing flexible business models, Screen Capital is able to pick up some of this slack, via gap-financing on co-producing from an initial stage of a project or by putting up a minimum guarantee against distribution rights.

Screen Capital is backed by Chile’s Production Development Corporation (CORFO), which backs Chilean venture capital funds. Screen Capital’s slate investment will take in content from multiple companies.

Variety reports that its first $20 million of financing is channeled via a Screen One fund, which has now successfully completed its financing. Screen Capital is now working to raise further private investment, backed by Corfo.

“Screen Capital combines the world of audiovisual industries with the model, scale and diversification of venture capital. If we add to this a team and expert partners and smart money, it’s a very good mix,” Emden stated.

Glovo Drops 2 Latin American Markets

On Tuesday, Spain-based Glovo announced it will be exiting four markets- Turkey, Egypt, Uruguay and Puerto Rico- which it says is part of a goal of pushing for profitability by 2021.

Today, Uber also confirmed rumors that circulated late last year by announcing it’s offloading its Indian Eats business to local rival Zomato — which will see it take a 9.99% stake in the Indian startup. In other recent news, Latin America focused on-demand delivery app Rappi announced 6% staff layoffs.

Photo Courtesy of Tech Crunch

                                                     Photo Courtesy of Tech Crunch

Glovo’s exits in four markets mean its app footprint is shrinking to 22 markets, maintaining a focus on South America, South West Europe, and Eastern Europe and Africa.

Glovo is essentially saying goodbye to the Middle East, despite its recent late stage financing round being led by Abu Dhabi state investment company, Mubadala. Last month, Glovo told Tech Crunch that regional expansion was not part of Mubadala’s investment thesis.

Commenting on the exits in a statement, Glovo co-founder and CEO, Oscar Pierre, said, “This has been a very tough decision to take but our strategy has always been to focus on markets where we can grow and establish ourselves among the top two delivery players while providing a first-class user experience and value for our Glovers, customers and partners.”

Last month Pierre told Tech Crunch that the Middle East looks too competitive for the company to expand further.

“Leaving these four markets will help us to further strengthen our leadership position in South West and Eastern Europe, LatAm and other African markets, and reach our profitability targets by early 2021… I want to place on record our thanks to all of our Glovers, customers and partners in the markets from which we’re withdrawing for their hard work, dedication, commitment and ongoing support,” Pierre added.

The exits sum to Glovo withdrawing from eight out of a total 306 cities. The company also said the eight cities collectively generated 1.7% of its gross sales in 2019: signalling the move doesn’t amount to a major revenue hit.

Glovo disclosed a $166M Series E raise last month, which pushed the business past a unicorn valuation. At the time, Pierre told Tech Crunch that the new financing would be used to achieve profitability “as early as 2021”, foreshadowing today’s announcement of a clutch of market exits.

Back in November in an on-stage interview at TechCrunch Disrupt Berlin, Uber Eats and Glovo discussed the challenges of turning a profit. Glovo co-founder Sacha Michaud explained that he expects further consolidation in the on-demand delivery space.

Michaud said that Glovo is profitable on a per unit economics basis in “some countries” — but admitted it “varies a lot country by country”.

Spain and Southern Europe are Glovo’s best markets, he added, confirming it generates operating profit there.

“Latin America will become operation profitable next year,” Michaud predicted.

H&M to Enter Panama in Late 2020

Last Friday, H&M, the second-biggest fashion retailer in the world, said it will open a first store in Panama at the end of 2020, making the country its first Central American market.

As reported by The New York Times, an H&M spokesman said the store would initially not be accompanied by an online store, and there were no concrete plans currently to expand to other Central American countries.

In a statement, H&M, which has 51 online markets and stores in 74 markets currently - including Puerto Rico, Mexico, Chile, Colombia, Peru and Uruguay in Latin America - said it would operate in Panama through a franchise agreement with Hola Moda S.A.

H&M has seen profits decrease for years amid slowing sales at its core H&M brand’s physical stores in established markets, and is now focusing new store openings to growth markets.

“Analysts predict a return to profit growth in 2020 as sales recover on the back of strategy tweaks and heavy investment to adapt to the rapid digitalization of retail that has brought new competition and changing shopping patterns” (The New York Times).

€10 billion Offer to Take Majority Control of Telefonica LatAm

Last year, Telefonica announced a broad business transformation plan, aiming to spin-off the majority of its units in Latin America (excluding Brazil) in an effort to focus more on its core European markets. The Spanish company also announced that a new executive team had been selected for the Telefonica Latin America unit.

Apparently, this shake up of South and Central American interests has not gone unnoticed by key figures in the local market, who believe that the region is not quite as unprofitable as Telefonica thinks.

According to Spanish newspaper El Mundo, a wealthy group of entrepreneurs could be looking to purchase a commanding stake of Telefonica’s business in eight regional markets. A sum of €10 billion has reportedly been offered for 51% equity, with the consortium’s offer coming via a Colombia-based company.

Per this deal, Telefonica would retain a stake of somewhere between 20% and 25%, with the remainder divided between minority shareholders (Total Telecom).

As reported by Total Telecom, Telefonica’s assets in South and Central America have previously been valued at around €9.3 billion, making the €10 billion reasonable. Furthermore, a significant capital injection to spend in their European markets would be a huge win for the company, given its shifting priorities away from Latin America.

Such a sale would not rob the company of all of its regional influence, as its remaining equity would ensure it retained some level of strategic input.  

Video: Aiva's CEO Elizabeth Rey on Latin America

The Big Interview: Aiva's CEO Elizabeth Rey on Latin America

The Big Interview: Aiva's CEO Elizabeth Rey on Latin America

In this exclusive interview, Aiva CEO Elizabeth Rey talks about her career to date, the evolution of Aiva in the burgeoning Latin American financial services world…  •  Share

Aiva CEO Elizabeth Rey talks about her career to date, the evolution of Aiva in the burgeoning Latin American financial services world and explains how international expansion in new jurisdictions is on the horizon.

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