We believe in partnership. We believe that successful investing involves much more than financial capital. We are patient and active investors, providing strategic support and bringing global resources to each of our partner companies.
We believe in globalization. We believe that the world economy is deeply and irrevocably integrated. We help our companies to refine their global perspective and to be truly internationally competitive.
We believe in building value. We believe that sustainable investment returns are generated not by financial engineering but by intelligent growth and thoughtful internationalization. We work closely with management teams to strengthen their organizations and create growth: whether atomistic, organic, inorganic, or transformational.
We believe in transparency & risk management. We maintain a high level of transparency for our investors and an acute focus on risk management and corporate governance in each of our companies.
We build businesses.
Ours is not a “buyout” firm; we provide growth capital. We deploy our capital to help our companies expand and prosper globally—each in its own way. For example:
- Organic growth: we financed the growth of Burger King China from 56 restaurants to more than 1,300 high-margin restaurants;
- Intelligent Combinations: we supported Ser Educacional in executing an acquisition strategy to become the largest for-profit university in northeast Brazil;
- Opportunistic Aggregation: our capital enabled Waypoint Leasing to assemble a fleet of over 150 helicopters, becoming the world’s largest independent helicopter leasing company;
- Asset Transformation: our partnership allows Westport Fuel Systems to focus on the commercialization of its core asset—a rich patent portfolio and deep expertise in heavy-duty natural gas engines.
This is our practice. Whether through growth, combinations, aggregation, or transformation, we build businesses.
For 20 years, our strategy has focused on opportunities created by continuities and dislocations.
We build businesses.
We invest globally and opportunistically.
Rather than specialize in a specific country or industry, we see the world as our opportunity set. To invest effectively, we execute a strategy built on the concepts of continuities and dislocations. Using this strategy, we proactively create opportunities that present superior risk-adjusted returns.
Continuities drive global economic change over multiple decades. Fueled by underlying demographic, social, institutional, political, environmental, or technological forces, a continuity involves large-scale, long-term changes in consumption, investment, industrial organization, or resource allocation. Our focus on continuities permits us to look beyond short-lived fashions in order to identify companies that are well-situated to excel in a dynamic global environment.
Dislocations are disruptions that result in a temporary divergence between value and price. Dislocations may be caused by macroeconomic or political events, sectoral realignments, corporate or family dynamics, or external shocks.
Our focus continuities:
Over 20 years, the middle class in the world’s emerging markets will expand by more than 1.5 billion people. The needs and aspirations of this new class will drive increasing demand for convenience products, healthcare services, and private education.
We have helped build several businesses that serve the convenience needs of this new middle class: Circle K Mexico, BK China, and TAB Gida. And we have helped build companies that serve other aspirations of this transnational middle class: in healthcare (ReSearch Pharmaceutical Services), education (Ser), and travel (Flemingo and Flybondi).
One of the major global challenges is how to meet the nutritional needs for more than 7 billion people. We have closely studied a wide range of opportunities driven by this continuity.
In particular, rising food demand requires increasing yields, and increasing yields requires intelligent fertilizer use. Our investments in PolyNatura and Nitron will participate in the continued development of the global fertilizer industry.
Globalization is driving the long-term consolidation of many high-cyclicality industries. As can be seen in the steel and aluminum industries, consolidation can increase market power, improve margins, reduce cyclicality, and attract higher valuation multiples.
With our support, both Globe Specialty Metals and Arlington executed a series of accretive international acquisitions to become market leaders in their respective industries.
Cartesian believes that the world economy is deeply, irrevocably, and increasingly integrated. Globalization drives and is driven by international trade and investment, and supported by related information technology.
We have invested in global ocean-going logistics companies (Pangaea Logistics Solutions and ASO 2020 Maritime) and IT infrastructure companies (redIT, Aqua Comms, and Aloo Telecom).
Despite the financial crisis of 2008, a well-functioning, well-managed financial system remains a prerequisite to sustained economic growth.
We see several areas of long-term opportunity in the evolution of the global financial system including, mid-market lending in well-regulated systems (Banco Daycoval), integration of the insurance and capital markets (Cartesian Re), automotive finance in China (Baoxin), and heavy-helicopter leasing (Waypoint). We also have sought to build financial services businesses that are “anti-fragile”—that benefit from large-scale financial volatility. These include the Moscow Exchange (Russia’s sole securities exchange) and Cartesian Royalty (which creates gold-streaming opportunities around the world).
Over the past decade, the share of cross-border M&A led by emerging market entities will continue to increase. This continuity is fueled by a period of sustained growth in Asia and the Gulf Region, and the rise of sovereign wealth funds-as well as by realignment of capital triggered by the financial crisis of 2008.
Anticipating demand for energy and natural resource assets by emerging markets acquirers, we helped to professionalize and institutionalize Fondul, which owns stakes in wide-range of Romanian resource companies.
Wireless technologies have become an essential good. Worldwide, mobile telephony subscribers outnumber fixed-line subscribers by almost three to one.
We have a long and successful track record of investing in wireless technologies–from Russia to Romania to Latin America. We have continued that trend with investments in Pangaea Wireless, which holds stakes in several wireless-related businesses, most notably Grupo TorreSur and Network Management Services, BTS Torres, and Public Mobile.
The need to responsibly manage our planet’s resources is now at the forefront of our culture. This growing awareness should support businesses focused on sustainable growth.
We invested in Westport, which is well-positioned to benefit from initiatives to reduce greenhouse gases and efforts to convert diesel engines to natural gas, and Brilia, which captures an opportunity driven by the global push for energy efficiency and new lighting technologies.
In executing our investment strategy, we adhere to a strict and constant discipline.
Five values anchor our investment analysis, construction, and decisions—both the investments that we make and those that we do not.
Intelligent valuations. We are, fundamentally, value investors. We believe that attractive and fair valuations create superior risk-adjusted returns for all stakeholders.
Creative structures. We believe that thoughtful investment structures can align interests, manage risk, and generate value. For two decades, we have created numerous innovative structures; we have created and invested in preferred securities, convertible securities, option-based instruments, put-call arrangements, industrial and mineral royalties and streams, and depository instruments.
Risk management. We invest globally, with a special expertise in emerging markets. These markets present tremendous opportunities, as well as additional risks. We continually analyze how to mitigate, manage, or eliminate these risks—whether economic, currency, political, or exogenous.
Value creation. We build our partnerships to create value for both our investors and our stakeholder partners. As needed, we provide support through secondments, strategic advice, assistance in mergers institutional development, merger synergies, zero-based budgeting, and more.
And lastly, humility. We are chronic and insatiable learners. And we are keenly aware of what we do not know. While we invest expansively in diligence, we also believe deeply in the fortitude to walk away. Investing is our passion, but we believe that investment decisions must not be made out of passion.