Advent buys control of wholesale tech firm in 4th Brazil deal this year

jueves 18 de diciembre de 2014 16:55 GYT

By Guillermo Parra-Bernal and Aluísio Alves

SAO PAULO Dec 18 (Reuters) - U.S. buyout firm Advent International Corp bought control of Brazilian wholesale technology products distributor Allied SA from rival One Equity Partners LLC on Thursday, on a bet that sales of mobile devices and videogame consoles will outperform a flagging economy.

The acquisition, Advent's fourth in Brazil this year, was the last made with proceeds from its $1.65 billion LAPEF V fund, managing partner Patrice Etlin said in an interview. The Boston-based firm last month raised a record $2.1 billion for a Latin America-focused private-equity fund.

According to a source with direct knowledge of the transaction, Advent paid One Equity Partners about 1 billion reais ($376 million) for 75 percent of Allied. The source, who requested anonymity since the terms of the deal are private, said Advent paid the equivalent of 4 times annual earnings before interest, tax, depreciation and amortization for Allied.

Advent will help Allied undertake regional expansion, with Colombia being a potential destination, Etlin noted. The Radomyslers, the Brazilian family that founded Allied in 2001, will stay at the helm of the company.

The deal allows One Equity to divest a Brazilian asset whose revenue grew three-fold in the past four years, when an emerging middle class snapped up record amounts of tablets and cellphones.

One Equity Partners has for years been the private-equity arm of JPMorgan Chase & Co. JPMorgan plans a spin-off of One Equity Partners by the end of the year, as Wall Street firms unload parts of their businesses to comply with rules demanding they set aside more capital and cut proprietary investments.

Allied's business should experience faster growth as wireless operators walk away from selling devices directly to their customers. A recent decision by telecommunications industry watchdog Anatel banning long-term cellphone plans for customers and rising working capital costs are discouraging carriers from stocking up devices for sale.

Revenue at the São Paulo-based company was 3.5 billion reais last year. Some of Allied's 3,700 customers include Brazil's four wireless carriers as well as major retailers and wholesalers. (Reporting by Guillermo Parra-Bernal; Editing by Chizu Nomiyama)