November 2010 – As part of an ongoing series, LAVCA hosted a technical seminar for Mexican institutional investors entitled, “Designing and Managing a Successful Private Equity and Venture Capital Funds Program” in Mexico City on November 3-4,. The seminar was coordinated in partnership with the Asociacion Mexicana de Administradoras de Fondos para el Retiro (AMAFORE) with the support of the Multilateral Investment Fund (FOMIN).
Pierre-Yves Mathonet, author of several books on private equity and permanent member of the private equity subcommittee of the Chartered Alternative Investment Analyst® (CAIA) Program and Melvin Escudero, a former Peruvian regulator, led the workshop, which included practical guidance, best practices and case studies for pension funds allocating to private equity.
“As viable investment opportunities in alternative assets continue to strengthen in emerging market economies, Latin America is piquing interest among institutional investors around the world,” said Mathonet. “It’s essential that local institutional investors have access to information on global best practices.”
In 2009, Mexico adopted reforms that enabled the local pension funds (AFORES) to invest in PE/VC funds through Development Capital Certificates (CKD), which has generated an increase in pension fund investment in PE/VC activity.
“Regulations throughout the region are providing local pension funds with more flexibility to invest in alternative investment vehicles, both domestically and internationally. It’s having a positive impact on private equity in the region, but there is also a need for increased educational opportunities for pension fund investors,” said Escudero.
Addressing the group, Escudero noted that there is a positive outlook for pension funds and PE/V
C growth in the region, but especially in the five countries he labels the “LatAm Stars” – Brazil, Mexico, Colombia, Chile and Peru.
He also highlighted the positive impact that pension money has on local capital markets and PE/VC, but expressed concern that in many cases Latin American regulators have established a different set of rules for local GPs and international GPs, which proves problematic.
The friendliest country for local and global GPs is Colombia, while Mexico may be the least. Escudero emphasized the advantage of allowing the region’s institutional investors to allocate to both domestic and international asset managers. These advantages include more competition between GPs and the learning opportunities for local LPs working with international LPs.
The event was by invitation only and attended by over 30 investment officers of Mexico’s largest pension funds and most active institutional investors.
The Mexico pension fund seminar follows successful programs held in Colombia and Brazil in the past year. A session in Peru is scheduled for spring 2011.