SoftBank-Backed Volpe Capital Raises $80M to Invest in LATAM

Featured stories from LATAM this week include Mercado Libre’s strategic partnership with Pachama to develop projects to restore ecosystems in Latin America; Mexico set to legalize Marijuana and become world’s largest market; and Brazil's SEB plans Nasdaq listing for $500M premium schools business.

SoftBank-Backed Volpe Capital Raises $80M to Invest in LATAM

Volpe Capital announced the $80 million first close of its fund targeting high growth technology investments in Latin America.

Japanese investment conglomerate SoftBank, BTG and Banco Inter affiliates are anchor investors in the new fund, which is targeting aggregate commitments of $100 million with a hard cap of $150 million. Volpe also received a “large anchor investment” from its management team.

Andre Maciel, Gregory Reider and Milena Oliveira are the fund’s founding partners, and are based in São Paulo, Brazil. Notably, Maciel is the former Managing Partner at SoftBank’s $5 billion Latin America-focused innovation fund. He launched Volpe in 2019 primarily with SoftBank’s backing. Reider formerly invested at Warburg Pincus.

Maciel said the fund’s raise was “significantly oversubscribed with firm commitments” and believed to be “among the best capital raises for a first-time fund in its asset class in Latin America.”

According to TechCrunch, Volpe Capital plans to invest in about 15 companies over a two and half year time span, according to Maciel, who expects its average check size to be around $5 billion.

“We want to invest in companies that are not necessarily raising capital when we approach them,” Maciel noted.

The fund is seeking to back early-stage companies with less than $50 million in valuation as well as some later stage, high growth companies. The fund’s first investment — Uol Edtech — falls in the latter category with EBITDA margins above 30%, according to Maciel.

The fund it’s eyeing edtech, healthtech, software and (non-credit-related) fintech investments.

“We like sectors that are prone for disruption in Latin America and that require local customization[...] Given the stage of the vc/growth industry in Latin America, we believe it is better to be a generalist,” Maciel added.

Mercado Libre Taps Pachama to Monitor and Manage its $8M Investment in LATAM Rainforest Restoration

Mercado Libre, one of Latin America’s largest e-commerce and financial services companies, has selected the startup and Y Combinator alumni Pachama as its strategic partner in developing projects to restore ecosystems in Latin America.

TechCrunch reports that the selection of Pachama is part of a program initiated by Mercado Libre called Regenera America. Mercado Libre is investing $8 million between in two reforestation projects: The “Mantiqueira Conservation Project,” organized under The Nature Conservancy and the “Corridors of Live Project,” designed and implemented by the Instituto de Pesquisas Ecológicas.

Both projects will focus on the reforestation of over three thousand hectares (equivalent to over 7,000 acres) through natural regeneration and planting over 1 million trees, restoring biodiversity corridors and protecting hydrological basins in the Atlantic Forest region of Brazil.

The agreement marks the first time Mercado Libre has tapped money from a recently issued $400 million Sustainability Bond, which was designed to finance projects of what the e-commerce giant called “triple impact” in the Latin American region. The bond was issued by JP Morgan and BNP Paribas.

Mexico Set to Legalize Marijuana, Becoming World’s Largest Market

Lawmakers in Mexico approved a bill to legalize recreational marijuana; a milestone for the country, which could become the world’s largest cannabis market.

With more than 120 million people, Mexico would represent the largest marijuana market in the world by population. The crop could become big business in Mexico, a potential financial lift for an economy badly battered by the coronavirus crisis.

The 316-to-129 vote in Mexico’s lower house, the Chamber of Deputies, came more than two years after the Mexican Supreme Court ruled that the country’s ban on recreational marijuana was unconstitutional and more than three years after the country legalized medicinal cannabis.

According to The New York Times, the chamber approved the bill in general terms before moving on to a lengthy discussion of possible revisions introduced by individual lawmakers. In its final form, the measure is widely expected to pass through the Senate before being sent to President Andrés Manuel López Obrador, who has signaled support for legalization.

If enacted, Mexico would join Canada and Uruguay in a small but growing list of countries that have legalized marijuana in the Americas, adding further momentum to the legalization movement in the region.

It is unclear how much the law will benefit Mexico’s poor farmers, who have grown marijuana for decades and often found themselves in the center of conflicts between feuding drug trafficking groups. The bill mandates that small farmers and indigenous people be given priority in licensing, but stipulates only that these vulnerable groups can be granted more than one license.

“It’s an excellent economic, natural, ethical and moral solution for a country in need,” said Juan Sánchez Mejorada, Chief Executive of Ceres Soluciones, a medicinal cannabis company. “Doing this right could give Mexico an economic surplus,” he said.

Brazil's SEB Plans Nasdaq Listing for $500M Premium Schools Business

Brazilian education group Grupo SEB plans to spin off its premium K-12 schools business and list it on Nasdaq, controlling shareholder and chief executive Chaim Zaher told Reuters.

Zaher is a long time investor in Brazilian for-profit education and owns stakes in Yduqs Participacoes (YDUQS)  (formerly known as Estacio) and Cogna Educacao. In recent years, Zaher has switched paths and invested in developing K-12 schools, mainly private bilingual ones.

Zaher expects the business to be valued at $500 million, based on its annual earnings before interest, tax, depreciation and amortization (EBITDA) of around $50 million USD. He plans to list around 30% of the shares in a primary offering on the U.S. exchange, and will use the proceeds to expand the business.

Among the operations to be included in the new listed company is Maple Bear, a Canadian school brand that has franchisees in Latin America, Asia and Europe. SEB owns 70% of Maple Bear, which oversees a network of 532 franchised private schools in 30 countries. Despite the disruptions caused by the COVID-19 pandemic, Maple Bear has grown and added 60 franchises to its network last year.

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