11 de junio 2007 - 00:00

BASE launches fund to buy firms

In an unprecedented step, Buenos Aires Stock Exchange (BASE) will launch a mutual fund to be applied in companies. In the first place, ARG$60 millions will be involved, though resources from Retirement and Pension Funds Administrative Bureaus (AFJP, in its Spanish acronym) and from other institutional investors may be added later. The announcement will be made today by the head of the entity, Adelmo Gabbi, in a meeting with Argentine President Néstor Kirchner and Argentine Economy Minister, Felisa Miceli.

More investment

"We believe that Argentina needs more investment to sustain high growth rates. This new fund will be a way of contributing to it," Gabbi explained to this newspaper. The new "venture capital", as this kind of instrument is called, will mainly support small and medium-sized enterprises (SMEs) with good expansion prospects and capable of creating jobs.

BASE will compete in this way with different private funds in domestic market, which also seek companies, like Pegasus, Newbridge, Southern Cross and Exxel Group. The head of IRSA, Eduardo Elsztain, has also announced a future launch.

Among the next steps to be taken by BASE, we find registration of the new fund in Argentine Securities Commission, representing a substantial difference against the rest (not opening quote). The instrument is intended to quote its quota shares so as to allow retail investors to acquire them.

Moreover, it would be a way of fulfilling an old government wish: linking resources in the hands of pension funds to productive sector. The first step in this direction was made last year, when AFJPs bought ARG$500 millions of Gas Trust 1, financing extension of TGS and TGN gas pipelines.

BASE officials state that the entity has great surplus liquidity to allocate part of resources to productive activity. BASE has around ARG$300 millions from activity on stock market during the last years.

On the other hand, this kind of fund would allow incorporated SMEs to quote their stocks in BASE.

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