Last updated: 07:42 / Thursday, 28 April 2022
Opinion by Arturo Hanono

Global Investments in Private Equity of Afores Will Catch Up With Local Investments

Image

Global investments in private equity of AFOREs (CERPIs) will reach local investments faster than we think, since the value of committed capital of CERPIs is slightly more than double the value of CKDs in 4 years since allowed to invest globally.

1

Another important fact is that the CERPIs in 4 years that began to invest globally, already have a market value of $5,271 million dollars; while in 13 years the vehicles that invest in local private capital (CKDs) have a market value of $13,825 million dollars.

Some local GPs are concerned about this growth in global investments and others have seen it as an opportunity to specialize and broaden their horizons by taking advantage of their global relationships or with their parent company. Undoubtedly, the opening is causing greater competition where those who adapt to change and are competitive will survive and the beneficiary will be the investor.

Global diversification allows the institutional investor not only to incorporate assets in another currency, but also helps to make the portfolio defensive against the daily fluctuations of public securities, which is useful in long-term portfolios. This situation is precisely what has led almost all AFOREs to include global private equity in their portfolios to a greater or lesser extent.

Of the $254,867 million dollars managed by the AFOREs as of December 2021, 6.7% are alternative investments (CKDs and CERPIs), of which our estimates reflect that 2.1% is in global investments in private equity (CERPIs). This figure only considers the market value since in terms of committed capital the percentage triples.

In the 15 largest GPs at market value, we can see a mix between those that only manage investments in local private equity (CKDs), global (CERPIs) and both: 7 do not have CERPIs, 4 do not have CKDs and 4 have both.

2

The 202 CKDs and CERPIs are managed by 79 GPs (data as of December 31, 2021), of which: 64 manage 123 CKDs and 21 manage 79 CERPIs, of which only 5 have both. So far there are more administrators and funds in the CKDs than in the CERPIs.

3

In the CERPIs, the number of funds is increasing significantly due to the specialization that some AFOREs are having in assigning a fund for each Target Date Fund (there are 10 SIEFOREs per AFORE), while others have chosen to have 2, 3 or only 4 funds that allow risk management in a more aggregated way. This situation has not occurred in CKDs.

In the CKDs there are 15 GPs that manage more than 3 funds and 49 GPs that barely manage at least 2 funds. For all the GPS if they do not continue their strategy with another fund, the day they are amortized they will disappear, and this is more critical for the 34 that only have one fund in the market.

In the CERPIs there are 6 GPs that manage at least 3 funds and 15 that manage at least 2.

The contraction of the GPs in the CKDs will be seen gradually to the extent that the current ones are amortized in the coming years.

About Arturo Hanono

Arturo Hanono is Senior Advisor in Mexico at Alpine Capital Advisors, firm specialized in global private equity advisory. With over 35 years of asset management experience in Mexico, Arturo supports all of Alpine’s fundraising and investor relations efforts in Mexico. Prior to joining Alpine, Arturo held the CIO position at various Mexican pension funds. Arturo is currently an investment committee member of several companies. He holds a degree in Economics from Universidad Anahuac. He won first place in the National Securities Market Prize organized by the Mexican Stock Exchange (BMV) with his professional thesis in 1985. You can find him at arturo@alpineca.com
menu