Patrik Brummer, founder and chairman of the Swedish hedge fund Brummer & Partners, expressed his faith in the Philippine economy over the next decade when he on 9 July introduced a new $120-million Navegar Fund dedicated to invest $10 million to $20 million each in eight to 10 mid-sized Philippine companies over the next five years.
“I would rather be investing in the Philippines than in the west over the next 10 years,” Brummer was quoted in Manila Standard Today.
The extraordinary 7.8 percent gross domestic product expansion of the Philippines in the first quarter drew a lot of attention especially among fund managers.
Brummer, however, says “we are not starting this fund on the assumption that the economy will grow 7 percent over the next 10 years.”
“If the Philippines gets 4 percent to 5 percent growth, I will be very happy with that,” he says.
“I would rather have a sustained and stable growth. Maybe the Philippines also grew too fast in the last year or so. But I would definitely make the assumption that the Philippines will grow faster than the world economy,” he says.
Who should be interested in the new financing opportunity?
“We are looking at businesses that are already up and running and profitable,” he says.
“In the normal case when we are supposed to be the minority, if we invest $10 million to $20 million in a minority position, then the value of the company should be $30 million to $50 million. You have to be a profitable company, you have to have a critical mass, depending on your margins,” he says.
“If there are companies that need $10 million to $20 million to grow their business …that is where we can claim we are the first movers. If you need capital to grow the business, then they should come to Navegar,” says Brummer.
“We have already gotten quite a lot of interest. The challenge for us is to make sure with do the business with the right people, good executors, and those who want to grow their businesses,” says Brummer.
Navegar Fund is looking to invest in consumer finance, food, apparel, retail, healthcare, real estate, business process outsourcing, tourism, education and manufacturing.
The 64-year-old former banker established Brummer & Partners in Stockholm in 1996 with a $50-million capital. The group’s total assets now amount to $15 billion. Before establishing his own company, Brummer worked for 22 years at the Swedish investment bank Alfred Berg.
The idea of putting up the Navegar Fund actually started five years ago, during a chat between Filipino banker Honario Poblador and business process outsourcing executive Javier Infante. The concept began to take shape when the two Filipino executives met Brummer in 2010.
“We talked about this five years ago. It is not as if we are jumping to a bandwagon. We met Patrik and his team at the end of 2010. This has taken us a while. It takes time to talk to investors and convince them there is something to be done here. It took us a while to raise money,” says Poblador, formerly the managing director for Rothschild’s investment bank in the Philippines.
Infante, a co-founder of BPO pioneer Ambergris Solutions and current chairman of Enderun Colleges, considered as the most expensive college in the country, says Navegar Fund will help family-owned enterprises achieve growth.
The Navegar team, currently composed of eight professionals, is led by Poblador and Infante as managing partners. Aside from equity infusion, Navegar Fund would provide companies with expertise, through representation in the company’s board or executive committee.
