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FINANCIER: JUAN NAVARRO (int'l edition)When Mexico's late-1994 peso crash sent financial shock waves through Latin America, Argentine financier Juan Navarro called together managers of companies controlled by his buyout firm, Exxel Group. He gave them 48 hours to draw up fast-action plans to slash fixed costs, halt credit lines, and conserve cash to defend against a liquidity crunch and looming recession. Today, amid another emerging-markets crisis, Navarro is more optimistic. Because of Argentina's economic and financial reforms, he expects a ''much milder'' impact on the country this time. ''Argentina has a different structure from Brazil and other emerging markets,'' Navarro says. Indeed, Exxel and other private equity investors are boosting Argentina's ability to ride out the global storm by injecting fresh capital, management, and technology into companies they buy. In late September, in what Navarro sees as a sign of investor confidence, French supermarket operator Promodes paid $420 million for a 49% stake in Supermercados Norte, a chain that Exxel bought for $440 million in 1996. ''This recession is going to come as an opportunity,'' he says. Uruguayan-born Navarro, 46, was the first to tap the profit potential of buying into cash-starved Argentine family businesses, turning them around, and then selling them. He quit a promising career at Citibank in Buenos Aires to launch Exxel in 1991 as the country's first homegrown private-equity buyout firm. Now, with $1.4 billion in stakes put up by investors from General Motors Corp. to the Chanel family, Exxel is managing 48 companies with total sales of $3.3 billion. Before going into any new business, ''we always benchmark with the U.S. and Europe,'' Navarro says. ''We consider [the investment] an arbitrage between more- and less-developed economies.'' But to attract investments in higher technology, Navarro concedes that Argentina needs more reforms in everything from labor costs to education. Exxel's electric companies in three provinces have set up university scholarships, and other projects are on the way. Such community activity, Navarro says, is a ''moral responsibility'' for business.
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Updated Oct. 15, 1998 by bwwebmaster
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