(Bloomberg) -- Technology-focused buyout firm Thoma Bravo LLC has identified three or four companies in Latin America as potential targets in the region.
The Chicago-based group known for its big bets on enterprise software is focusing its scouting efforts in Mexico and Brazil, the region’s two biggest economies, although no deal is imminent.
“We are finding a few software companies in Latin America that are very important to their local markets and have grown to the scale that is of interest to us,” Orlando Bravo, the company’s co-founder and managing partner, said in an interview Wednesday at a Mexico City hotel.
Bravo said his team in hiring new recruits in Mexico to help some of its other companies with software development, citing Austin-based cybersecurity firm SailPoint Technologies Holdings Inc. as one example.
“We have started to deploy more development resources from our companies in Latin America,” he said. “That has made it a lot easier for people who distribute out software products.”
Thoma Bravo bought SailPoint in 2022 in a $6.9 billion deal. Bloomberg reported earlier this month that the investment firm had begun interviewing underwriters to explore options for SailPoint, including an initial public offering. Bravo declined to comment about the potential listing.
For the time being, Thoma Bravo isn’t creating a Mexico-specific team but said it could be an option in the medium term. “We would have to make deals from the US into Mexico and Latam and then those deals have to be successful,” he said.
Alpine Capital Advisors is Thoma Bravo’s partner in Latin America.
IPOs and Rates
Bravo, in Mexico to participate at a New America Alliance event, said the US IPO market remains available for companies but regulation makes it hard for many of them to list.
“In a lower growth environment, there are wonderful IPO-ready companies that will trade on a multiple of free cash flow” but the process “is not very well set up for those companies,” he said. “There is a structural problem, friction that does not make sense in a digital world — it really doesn’t. We need more transparency.”
Asked whether the Federal Reserve’s initial 50-basis-point cut to interest rates will help boost dealmaking, Bravo said it’s not enough. “We are still living in a high interest market, and the lack of private equity dealmaking is due to even more fundamental issues.”
Bravo said private equity firms will struggle without a robust US economy, potentially leading to consolidation in the industry in 2025. “Either the great American economy saves people or there will be a shakeout in private equity.”
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