The story we broke last week about Batanga’s acquisition of Latin American digital media companies I-Network and Adfunky is a reflection of how M&A and private equity players are seeing opportunities among digital media companies that have the ability to target global Latin Audiences (U.S. Hispanic, Latin America and Spain).
Due to the expansion of interactive-digital- technologies, media companies and content producers worldwide can reach Latin audiences regardless of where these audiences are based. This certainly can enable these companies to realize economies of scale. Portada has devoted a whole series to this relatively new phenomena (Latin Digital Powerhouses).
There are many examples of private equity/VC backed companies that have, at least partly, been backed with this rationale in mind. Batanga is one of them, but there are many more. Already in 2006, Greg Sands, Managing Director of Silicon Valley based private equity firm Sutter Hill Ventures told us that his company invested in online ad-network Consorte Media, later acquired by AudienceScience, because “the Hispanic and Latin American audience online has gotten to critical mass and continues to grow rapidly. It has substantial buying power but is underserved. Consorte can help grow the market by providing better monetization to publishers.”
Other private equity/VC backed companies in the Latin advertising and media space, which have had varying degree of success, are Impremedia, Geoscape and Todobebe. Some have gone bust like Yellow Page publisher HYP Network. Right now there is a particular interest in the WebTV space, mobile/mobile advertising and, of course, Brazilian advertising agencies.
Off course large companies like Univision (is it getting ready for an IPO?) and Spain’s Grupo Prisa are also, at least in part private equity backed. In fact, U.S. private equity house Liberty Media Holdings decision to finance (rescue?) debt laden Grupo Prisa was mainly justified by Prisa’s large presence and potential in the U.S. Hispanic and Latin American markets (see our analysis piece: Prisa: Liberty takes charge).
One of the most interesting news during our recent Latam Advertisng and Media Summit was Spain’s Grupo Prisa’s Paul Westhorpe, Managing Director Global Digital Sales & Strategy, assertion that by 2015 Prisa expects 70% of its digital revenues to come from the U.S Hispanic market and Latin America. In order to obtain that goal Prisa is looking for small companies that are poised to rapidly grow with the help of Prisa’s digital assets. Westhorpe added that interesting acquisition targets are companies that have developed a specific niche in the digital space.
Do young companies targeting global Latin audiences sit in front of opportunities that were not available before and are therefore worthy of financing? The answers is yes, but as Drew Meyers, partner of Group Argent explains “in terms of a relative comparison to the US and Asian markets, i.e. Latam's online advertising and number of users, are still fairly small relative to those other regions, even including Brazil, at this time.”
Meyers, an advisor in the recent Batanga I-Network Ad-Funky acquisition, adds that “there is a significant amount of ad spending being done online throughout Latin America and the opportunity is growing. For exceptional companies showing substantial growth, there is interest from the investment community. That interest is not relegated to a single business model, such as ad networks, but includes all companies demonstrating the ability to attract users or ad spending, generate revenues and address the fragmented Latin market.”