London-based private equity firm Aureos Capital has teamed up with Urbi Desarrollos Urbanos (URBI), the Mexican house-builder, to launch an investment programme aimed at providing low-income houses.
The firm, which specialises in investing in small to medium-sized businesses in emerging markets, said in an announcement it was attempting to provide a housing scheme for a market which accounted for more than 50 percent of Mexico’s “economically active population”.
Aureos did not specify the amount of capital it would put into the scheme but said its “first phase” was for its Aureos Latin American Fund – part of a series of private equity investment funds it manages – to create a trust that would manage homes valued at between 12 percent and 15 percent of URBI’s projected revenues over the next four years.
The homes would be developed by Mexico-listed URBI, which since its inception 28 years ago, has developed more than 340,000 homes.
One of the ways the trust would make investments would be via issuing traditional mortgages – something of a rarity for many in the country. However, end-users could also take up Alternativa URBI mortgages – effectively loan-to-own style financing. These would be granted by the Mexican Federal Mortgage Agency, Sociedad Hipotecaria Federal.
Aureos said the scheme would offer an alternative for Mexicans not affiliated to the country’s government-sponsored housing agencies, Infonavit or Fovissste.
Erik Peterson, Aureos’ regional manager in Latin America, said: “This scheme represents an excellent opportunity to invest in the low-income sector in a more efficient and profitable way. It also broadens the opportunity for foreign investors to enter a sector that has generally been dominated by domestic investors.”
Aureos Capital was established in 2001. It manages more than $1.2 billion in equity across 16 private equity funds that invest across 50 emerging markets.