The total assets under management of the Mexican Pension Funds, AFOREs, reached 179.274 million dollars in January 2019, of which 10.774 million dollars belong to structured investments in just over 100 instruments, that is, 6.01% of the resources are invested in Development Fiduciary Securitization Certificates (CKDs) and Investment Project Fiduciary Securitization Certificates (CERPIs) that reached 741 million dollars through 19 issues at the end of January 2019. In the accumulated of the year (to February 22), two more were added raising 48 million dollars.
The potential amount of these CERPIs can reach 5.776 million dollars considering the maximum amount of the series A issue (capital calls) and the maximum amount of the issuance of additional series contemplated by CERPIs.
The CKD has allowed the Afores to participate in private equity through a mechanism listed on the stock exchange since 2009.
The AFOREs through the CKDs and the CERPIs, have participated in infrastructure projects, energy, real estate developments, forestry projects, private equity investment in companies, as well as financing.
The CERPIs emerged in 2016 as a complement to the CKDs that allow resources to be collected from funds and companies to invest in a wide range of projects.
The CERPI seeks to solve many of the limitations of the CKD, to have:
- A more flexible capital call structure,
- Most appropriate corporate governance requirements (the technical committee does not have to approve investments), and
- Minor disclosure requirements.
Between 2016 and February 22, 2019, 21 CERPIs have been placed. In 2016, the first CERPI was born, the MIRA issuer, a real estate company focused on the development of mixed uses in Mexico. In 2018 there were 18 CERPIs and in the first two months of the year (until February 22) two more were added (Blackstone and Spruceview).
The boom observed since 2018 is due to the fact that in January 2018 the regulation was relaxed to allow investment in CERPIs that finance projects outside the national territory in up to 90% of the issue.
The possibility of co-investing with the AFOREs in national and international projects has attracted internationally recognized firms such as:
- Blackrock. Investment management company established in 1988 and is the largest asset management company in the world with 5,315.409 million euros according to the firm Investment & Pensions Europe, IPE
- Blackstone. He was born in 1985. He manages assets for 361.000 million euros (place 49 in 2018 according to IPE).
- KKR. American firm with more than 40 years of experience and with managed assets exceeding 140.622 million euros (place 131).
- Partners Group. Founded in Switzerland in 1996. It manages 61.936 million euros (place 174).
- Lexington Partners. He is one of the largest independent administrators in the world focused on secondary transactions of private capital and co-investments. Since 1990, Lexington has raised more than 38.000 million dollars according to the placement prospectus (page 172), among others.
In addition to the diversification there is a transfer of knowledge from global investment managers to the AFOREs for their joint participation in investment projects.
Among the CERPIs that are in the approval process of the financial authorities are:
- Acon LATAM Holdings which is a diversified investment fund of private capital that operates in the United States, Mexico, Brazil and Colombia;
- Paladin Realty Administrador (PALADINCPI) a trust owned by Paladin Realty Management, a private equity fund manager focused on real estate investments;
- HarbourVest Partners Mexico a subsidiary of the fund manager that was created in 1982; HarbourVest Partners.
- Grupo Agricultura, Agua y Ambiente, a subsidiary of Renewable Resources Group (RRG), an asset management company with a focus on agriculture and other sustainable resources; among others that are in process according to information from the Mexican Stock Exchange.
It can be expected that this boom will continue in 2019.
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