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| Grupo ASSA |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 27650 |
| Company name | Grupo ASSA Worldwide S. L. |
| Country | Argentina |
| Sector | Professional, Scientific and Technical Services |
| Environmental category | C |
| Department | Global Inform. & Comm. Tech. |
| Status | Pending Disbursement |
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| Date SPI disclosed | April 29, 2009 |
| Projected board date | May 31, 2009 |
| Previous Events | Signed: June 26, 2009
Approved: June 25, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Grupo ASSA Worldwide S.L. (“Grupo ASSA” or “Company”) is a leading midsized pan-LAC IT services provider that offers:
- Business Process Transformation, including project management office, business process management and people management;
- IT services, software integration and development, including the planning, development, implementation and management of ERPs (JD Edwards Oracle, SAP) systems, applications, and development of customized software applications
- Application Outsourcing, including maintenance and operation of software applications (application management services);
- Integration Technology Services, including SOA services, application development around SAP and Oracle, Web 2.0 and E-Commerce integration and object-oriented development services for Java, Oracle JD Edwards, Java and .Net.
The Company currently has offices and development centers in Argentina, Brazil, Mexico and Chile. ASSA is a recognized regional leader in application management services, with a near-shore/offshore multi-sourcing delivery model and a strong, ubiquitous corporate culture across different countries. It has +700 SAP and JDE consultants, serving over 40,000 end-users more than 30 countries across 3 continents. The company is the largest system integrators for SAP and Oracle platforms in Argentina.
Grupo ASSA is legally incorporated in Spain but founded and with administrative headquarters in Buenos Aires, Argentina. |
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| Project sponsor and major shareholders of project company |
| Grupo ASSA is majority-owned by its founder, Chairman and CEO, Roberto Wagmaister, who retains a 57.38% stake. The remaining shares are split as follows among individuals: (a) 18.86% management, and (b) 23.76% minority outside investors (a majority of whom know Mr. Wagmaister from his early days as CEO of Ernst & Young Consulting Argentina). Mr. Wagmaister is the main Sponsor of the Project. |
| Total project cost and amount and nature of IFC's investment |
To strengthen its balance-sheet and lay the foundation for future expansion plans, the Company is proposing to partially fund its $20 million business plan through a new capital raise of $10 million from IFC:
- $5 million in the form of an Straight Equity investment and
- $5 million in the form of a convertible loan or warrant option.
The remaining $10 million would be split as follows:
$4 million Straight Equity from the existing minority investors who would convert $3 million of existing outstanding debt and contribute an additional $1 million of fresh equity capital, both at terms pari-passu with IFC’s straight equity investment; and an additional $6 million from the company’s own internal cash generation. |
| Location of project and description of site |
| Various countries in Latin America. |
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| Anticipated development impact of the project |
Contribution to growing the LAC IT sector: LAC represents approximately 3% of the worldwide IT market, and is growing at a strong pace, with CAGR of 12.8% projected for 2007-2011. There is very little venture capital activity in the IT sector in LAC, and even very few IT-specific dedicated VC funds. An investment in ASSA would:
- promote higher-end technology service development in LAC, thus supporting the region’s consolidation trend and - move towards achieving greater efficiencies and economies of scale; and
- provide scarce capital to a young, but growing IT offshoring sector.
Showcase LAC’s potential to develop competitive application offshoring of IT services: The vast majority of the IT offshoring activity has gone to India. Latin America, however, has assumed an important role, especially in the application offshoring trend and the region is becoming increasingly more attractive for US and European companies desiring to achieve efficiency gains from proximity, same time zone advantages, and a well-educated labor force. An investment in Grupo ASSA will support a mid-stage high-growth LAC IT-services company scale up its business and become globally competitive and will demonstrates the ability to produce world-class IT services companies in Latin America, as an alternative to Indian peers.
Job creation: Companies like ASSA benefit local IT professionals through creating high quality job opportunities and developing skills in the value-added IT services sector. ASSA offers an opportunity to LAC’s IT-educated individuals to apply their talents and knowledge to innovative technical solutions in many sectors such as manufacturing, packaged goods and retail. |
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| IFC's expected development contribution |
Provision of long-term growth capital: IFC will provide access to long-term growth capital to a second-tier LAC company which continues to face difficulties to fund its growth plans due to the limited availability of long-term capital in the country where it is headquartered.
Access to IFC’s global expertise: IFC has accumulated considerable expertise related to IT services and outsourcing; an expertise that is unmatched in emerging markets and that ASSA appreciates and wants to tap into. IFC will provide global industry knowledge on best practices, benchmarks and trends in key IT markets, as well as guidance on potential acquisitions and implementation of best practice procedures, particularly regarding growth strategy and corporate governance standards.
IFC’s stamp of approval: Having IFC as an investor will greatly help ASSA in mobilizing new capital from the few capital resources available, mainly because of the attractive terms secured for IFC’s investment in ASSA. In addition, Grupo ASSA is positioned to grow significantly; its areas of growth require entering new markets and selling to new clients. Having IFC as an investor will help the Company establish its credibility and provide additional comfort about its financial strength. ASSA is also interested to establish contact and partnerships with similar firms in South and East Asia. IFC, therefore, is expected to have an important role as a strategic partner ready to support the Company through its various growth stages.
Strengthening governance in preparation for a private trade sale or IPO: Grupo ASSA plans for a private trade sale or IPO, and looks to IFC to assist in strengthening its governance, identifying potential independent directors, and other activities as needed, which will, in turn will boost its credibility to future buyers or investors. |
| Environmental and social issues - Category C |
| Environmental and social risks and impacts were reviewed and assessed to be minimal, as this project will use leased office spaces and focus on developing and marketing technology solutions. Accordingly, this project has been classified as Category C according to IFC’s environmental and social review procedure. |
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| For inquiries about the project, contact: |
Paul Dougall, VP of Corporate Development
Ing Enrique Butty 220
Piso 15 – C1001AFB
Buenos Aires, Argentina
T: 54-11-4510-7224
E: pdougall@grupoassa.com
W: www.grupoassa.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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