Last updated: 05:47 / Thursday, 29 October 2020
Column by Arturo Hanono

Mexican Pension Funds' Diversification with Global Alternative Investments Continues

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In the first nine months of the year, 7 GPs have issued 20 private equity vehicles that are listed on the two stock exchanges in Mexico (BMV and BIVA). In total, 3 CKDs have been issued that invest in Mexico in the infrastructure, private equity, and credit sectors; while 4 GPs have issued 17 CERPIs to invest globally in the fund of funds sector.

1

The capital committed to invest globally amounts to 1.924 million dollars (md), while the resources that will be invested in Mexico are 882 md to give a total of 2.806 million dollars that represent 9% of the 31.538 million dollars of committed capital of all CKDs and CERPIs. Since 2018, when global investments were allowed through CERPIs, the trend has been for global diversification, hence the predominant issuance of CERPIs rather than of CKDs. Of the committed Capital, the called capital represents 57% where the called capital of the CKDs dominates with respect to the CERPIs.

2

All these issues were made before September 7, the date on which CONSAR published changes to the regulation of the AFOREs through the so-called “Circular Unica Financiera” also known as CUF.

Regulatory changes seek for CKDs and CERPIs to incorporate elements that offer certainty in terms of risk management, investment, and governance policies and, above all, guarantee that this type of investment does not represent an excessive cost for workers. Therefore, these changes are expected to slow down the pace of issuances in the coming months.

A total of 25 CKDs and CERPIs have been identified in the pipeline.

  • From 2017 to September 30, 14 began their legal issuance process in 2019; 6 in 2020 and 5 between 2017 and 2018. In general, the issuance process takes two years and the exceptions are those that manage to leave within a year of starting their legal issuance process.
  • 14 are doing their procedure at BIVA and 11 at the BMV.
  • 9 are CERPIs and 16 CKDs.
  • 10 are frequent issuers of CKDs and CERPIs and 15 are new.
  • There are 12 that want to issue in the real estate sector (4 CERPIs), 6 in private equity (4 CERPIs); 2 debt; 2 Infraestructure; 2 in other sectors and 1 fund of funds (CERPI).
3

The AFOREs have 201.089 million dollars of assets under management as of August 31, of which 11.804 million dollars are investments in CKDs, CERPIs and structured (5.9% of the portfolio). Currently, investments in CKDs represent 4.8% of assets under management and only 1.1% are investments in global alternatives (CERPIs). If called capital is considered, the percentages go to 6.7% in local investments (CKDs) and 4.8% in global investments (CERPIs) to represent 11.5% with the current value of assets under management.

The diversification sought by the AFOREs will lead to the continued growth of the issuance of CERPIs.

Column by Arturo Hanono

About 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 arturohanono@aol.com

 

 

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