The assets under management of the 10 AFOREs in Mexico amount to 186.771 million dollars at the end of April 2019, according to CONSAR. The AFOREs can invest 18% in CKDs and CERPIs as an average because each Siefore has his own limit.
The AFOREs at the end of April 2019, have investments in CKDS and CERPIs that represent 6.0% of their portfolio and have commitments that amount to approximately 5.5%, which establishes a potential market for investing 6.5% (10.272 billion dollars).
There is a total of 129 CKDs with a market value of 12.631 million dollars (md) according to the information prepared with data from the Mexican Stock Exchange and the issuers as of April 30.
Of these 129 CKDs 21 are CERPIs which have the characteristic that as of January 2018 they can invest 90% of the resources they manage abroad and 10% in Mexico. Currently the value of CERPIs is 791 million dollars of which 18 were issued in 2018 (81%); so far only 2 in 2019 and one in 2016.
Of the 21 CERPIS there are 11 fund of funds, 6 of Private equity, 3 of infrastructure and only 1 of real state that was born in 2016 before the changes of 2018.
Due to this change, 2018 is the year with the highest issuance of CKDs (38) and the highest amount committed in one year (6.869 million dollars).
As issuers of CERPIs we can find names like: Blackstone (4 CERPIs); KKR (3); BlackRock (2); General Atlantic (2); Lexington Partners (2); Spruceview (1); Partners Group (1); Glisco Discovery (1); Discovery Capital (1); Global Capital (1); Motal Engil (1); Mexico Infrastructure Partners (1) and MIRA Manager (1).
In the CKD universe, the sector with the largest amount committed is real state, which represents 25% of the total, followed by the infrastructure sector (19%); private capital (18%); fund of funds and energy (13% respectively); credit (11%) and the primary sector with 1% of the total issued.
The CKD performance is complex given that each one has its own characteristics (sector, economic cycle, year of issue, degree of advance of investments, leverage, among others), which makes comparisons difficult.
Despite this, the comparisons open the conversation with the GP about their performance in the period being compared.
The comparisons must be made with public information since it allows equal circumstances.
The way to calculate the performance of the CKDs with public information is calculating the IRR of each one (inflows and outflows of money to the CKD in the time of life that it has). In the 10 years of life that CKDs have, it is important to mention that between 2009 and 2012 they were pre-funded and since 2012 they were allowed to make capital calls, leaving the first CKD under this modality in July 2012. Homero Elizondo expert in CKDs estimated that the change reduced the cost between 200 and 500 basis point.
If all the CKDs are grouped by year of issue, the years that stand out are:
- The 4 CKDs that came out in 2009 have a IRR of 9.8% in simple average and unweighted to the assets under management of each CKDs;
- The 8 CKDs that came out in 2010 have an IRR of 7.6% on average;
- The 4 CKDs of 2013 have a IRR of 7.3%;
- The 19 CKDs of 2015 have an average IRR of 6.3% and
- The 5 of 2011 have a IRR of 5.9% to mention the most profitable years of the last decade.
The results of the first three years of life of the CKDs is likely that are due to the fact that they are the ones that have lived the longest (between 7 and 10 years of life).
When reviewing by sectors you can see:
- In the case of real state, the CKDs that were born between 2010 and 2013 bring average IRR per year between 6% and almost 9%.
- For the infrastructure CKDs, two-digit average IRRs can be seen in at least three years: 2012 (21.9%), 2009 (11.5%) and 2015 (10.0%).
- In the energy sector, although the average IRR of the 3 CKDs in 2015 is 10.3%, the case of the CKD that was issued in 2012 have a negative IRR of 57.8% stands out.
- For private equity CKDs, there are two years with IRR slightly above 9% (2010 and 2012).
- For credit CKDs, 2010 and 2012 stand out with IRRs of 8.0% and 10.0% respectively.
- In the CKDs that are fund of funds, the highest TIR is 2012 with 4.3%.
- In the primary sector where there are only 2 CKDs, only the 2008 issue is the one with an IRR of 4.4%.
- Only 15 of a total of 129 CKDs, are identified with a greater IRR than 10% as of April 30.
- In real state the two CKDs of Grupo Inmobiliario MEXIGS (IGSCK_11 and IGSCK_11-2) and FINSA (FINSACK_12) have a IRR higher of 10%.
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