Fund managers raise $3bn from Mexican pensions

Mexico released statistics showing that $3bn has been raised since July 2008 using ‘certificados de capital de desarrollo’, securities that allow Mexican pensions to invest in private funds, including infrastructure-focused vehicles.

About Ps.$36.4 billion (€2.3 billion; $3 billion) has been raised since July 2008 through a new kind of security for investment in Mexico, according to figures released by the Mexican National Commission for the Pension System, including Ps.$14.9 billion by four infrastructure funds.

The securities, called certificados de capital de desarrollo, or CKDs, allow Mexican pensions to invest in infrastructure, private equity and real estate funds via publicly listed trusts. Other investors can purchase CKDs in these offerings, but the commission said Mexican pensions had invested about 90 percent of the Ps.$36.4 billion raised.

It will take quite some time for these three funds that are already there to really invest the proceeds that they have

Mauricio Costemalle

Three offerings took place last month alone: Navix, a debt fund that collected Ps.$4 billion; I Cuadrada, an infrastructure fund associated with the Black Creek Group that raised Ps.$2.7 billion; and Marhnos, a Mexican developer and concessionaire that raised Ps.$1 billion.

The commission said in a statement “investment in instruments like CKDs” creates jobs and economic growth for the country – a key priority for Mexican President Felipe Calderon.

But Mauricio Costemalle, a partner at consultancy Deloitte in Mexico City who covers project finance, said the fundraising isn’t necessarily being met with adequate investment opportunities.

“The government has been very slow in putting the projects in place and allowing the private entities to bid for them,” Costemalle said. “What I believe will happen is that it will take quite some time for these three funds that are already there to really invest the proceeds that they have.”

The three funds Costemalle refers to are Macquarie Mexico Infrastructure Fund, I Cuadrada, and Marhnos’s infrastructure fund. The Macquarie fund raised Ps.$3.4 billion from Mexican pensions in December 2009, and recently won a $150 million loan from the Inter-American Development Bank. It has so far only signed one deal—the Ps.$1.54 billion acquisition of Decarred, a construction company that has 20-year contracts to reconstruct and maintain highways in the Mexican state of Durango.

Fund or Group Date of Offering Amount Raised Percent Raised from Pensions
Agropecuaria Santa Genoveva July 2008 Ps.$1.65bn 99.9%
Red de Carreteras de Occidente October 2009 Ps.$7.755bn 97.0%
WAMEX Capital November 2009 Ps.$750m 80.0%
Macquarie December 2009 Ps.$3.415bn 100.0%
Atlas Discovery Mexico December 2009 Ps.$1.161bn 88.8%
Nexxus Capital IV March 2010 Ps.$2.641bn 95.8%
Promecap July 2010 Ps.$2.503bn 94.4%
AMB July 2010 Ps.$3.3bn 81.0%
PLA Inmuebles Industriales August 2010 Ps.$3.095bn 80.6%
Artha Operadora August 2010 Ps.$2.44bn 60.4%
NAVIX December 2010 Ps.$4.002bn 98.5%
I CUADRADA December 2010 Ps.$2.737bn 82.9%
MARHNOS December 2010 Ps.$1bn 70.3%
Total as of December 30, 2010 Ps.$36.449bn 89.6%
Source: Comisión Nacional del Sistema de Ahorro para el Retiro (Consar).

In addition to those three funds, one of the earliest groups to raise money through CKDs was Red de Carreteras de Occidente, co-owned by Goldman Sachs and ICA. Red de Carreterras de Occidente raised about Ps.$7.8 billion via these certificates in October 2009. Ninety-seven percent of that money was invested by pensions, according to the commission.

Costemalle predicted there would be a gap in investment in CKDs as the pension funds try to evaluate their investments. But he added that infrastructure would be a “very good asset class” for pensions once they learn more about how to select investments.