The Mexican Pension funds, known as AFOREs maintain investments in structured instruments (CKDs, CERPIs and structured debt) for 12.786 billion dollars, which are 5.9% of the assets under management (216.716 billion) at the end of January according to CONSAR's numbers.
This figure means that the AFOREs have 89% of the issues of CKDs and CERPIs and the remaining 11% other entities participate as insurers and pension funds (not AFOREs), among others.
From a total of 10 AFOREs, the 5 AFOREs that maintain investments of more than 1 billion dollars concentrate 85% (10.786 billion) of the investments in CKDs, CERPIs and structures debt. These 5 AFOREs in order of importance are: AFORE XXI-Banorte (3.42 billion), Citibanamex (2.90 billion), Sura (1.85 billion), Profuturo (1.5 billion) and PensiónISSSTE (1.21 billion). These amounts only correspond to the money called, so if the committed money is considered, they increase almost double (+ 49%) at the end of January 2020.
Comparing the investments of the AFOREs of this table with respect to the PREQIN Special Report: The Private Equity Top 100 de febrero de 2017 (page 9), AFORE XXI-Banorte has to be in place 87. Although there is a difference of three years in the comparison since the PREQIN report is to 2017 and the investments that are taken from the AFOREs are to January 2020, it can be concluded that the investments of the largest AFOREs in local and global private capital place them in the top 100 of private equity investors.
Another interesting fact is that only 5 of the 100 largest private equity funds (pages 4 and 5) have been issuers of CERPIs as is the case of the Blackstone Group (place 2 in the PREQIN report), KKR (place 3), HarborVest Partners (place 14), Lexington Partners (place 17) and Partners Group (place 21) which presents the potential for other international issuers to arrive in Mexico.
In total there are 75 issuers of the 114 CKDs and 32 CERPIs. The most important issuer is Infraestructura México with 1.5 billion dollars of committed resources oriented to the infrastructure sector; followed by Credit Suisse with 3 CKDs from the sector related to mezanine debt and resources committed for 1.4 billion. In the third position is Mexico Infrastructure Partners with 4 CKDs and 2 CERPIs that add up to 1.3 billion dollars of committed resources oriented to the infrastructure sector.
When reviewing investments in CKDs and CERPIs of the last 10 years, the growing interest of AFOREs in investing in private equity can be seen in the graph. Although a decrease in the figures is observed in 2016, this is due to the fact that in the information that CONSAR reports from this year, it separated the investments in the Fibras (mexican REITs) from the structured ones (where since then only the CKDs, CERPIs and the structured debt).
Investments in the last three years in CKDs and CERPIs have been on average of 2.241 billion dollars per year, so expecting a growth of 2.000 billion in 2020 is conservative given the average growth of previous years. This expected growth could be more in CERPIs than in CKDs given the interest observed in them since 2018.
Column by Arturo Hanono
Arturo Hanono is an institutional asset manager in Mexico. He has more than 30 year's experience in the Asset Management world, of which 15 he spent as a private banker and in the last 18 years has been CIO in several Afores. He has a degree in Economics from Universidad Anáhuac (1983). For his professional thesis, he won first place in the National Stock Market Prize organized by the Mexican Stock Exchange in 1985.
You can find him at firstname.lastname@example.org