Investment Philosophy

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Terra Nova completed its investment period on December 31, 2012.  We are no longer seeking new investments.  Nevertheless, the discussion below describes how Terra Nova approached its current portfolio and how it will probably approach new opportunities for any potential follow-on funds.

Terra Nova is focused on equity investments in mid-sized companies in Mexico.  We are particularly interested in companies that have the capacity to export to the United States.  Terra Nova prefers to invest in export agriculture and ancillary industries, but we are also open to investments in domestic-oriented industries such as infrastructure and construction.

Based on our long experience in Mexican business, we believe that a key constraint limiting firms in Mexico is a lack of capital, especially for relatively small enterprises.  Therefore, Terra Nova seeks profitable companies held back from growth by their limited access to funds.  These companies may be family-owned or owner-operated, and exist outside the scope of venture capital firms and private equity funds.  Terra Nova prefers to invest in companies that have annual revenues of US$2.5 million or more, or that have a clear path to grow revenues to that range in the near term.

Terra Nova seeks transactions that require total equity investments of between US$1 million and US$ 10 million.  We are open to taking minority positions, but we insist that such positions be significant.  Terra Nova is also interested in majority positions and 100% acquisitions.  We prefer to deal directly with current ownership.  We avoid auction formats.

When assessing a potential investment, we pay close attention to the company's competitive and operational characteristics.  In this area, our key selection criteria are as follows:

  1. Market leadership or the ability to achieve it
  2. Brand or franchise value
  3. Sustainable underlying demand for the company's product or service
  4. A demonstrated history of free cash flow generation
  5. Competitive advantages that present viable barriers to entry

Working With Terra Nova

After Terra Nova has completed an investment, our philosophy is to help build value as a strategic partner.  Some of our most important principles are as follows:

Provide Capital. In addition to investing its own funds in a company, Terra Nova will often use its extensive network within the U.S. Government and multilateral lending communities to attain additional financing from developmental finance institutions and export credit agencies, such as the Overseas Private Investment Corporation, the Inter-American Development Bank, and the Export-Import Bank of the United States.

Provide Expertise. Terra Nova believes that one key way to add value to businesses in Mexico is to ensure tight financial management and operational expertise.  Therefore, Terra Nova will identify, assemble, and support experienced and capable management teams.  To help ensure alignment of interests, we prefer to invest in teams with meaningful ownership in the companies we acquire.  We seek management teams that have the ability to transition to a formal corporate culture that embraces proven, successful business practices.

Tax Efficiency. Terra Nova generally seeks to help its portfolio companies attain some measure of tax-advantaged status, with the goal of passing such tax advantages through to the Partnership.

For a discussion of companies in which Terra Nova has invested, click the following link.

 

 

Portfolio Companies

Terra Nova has invested in several companies that deal with the agriculture sector in Mexico.

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Contact Us

For more information about Terra Nova, or to tell us about a potential investment opportunity, contact us today!