Mexico’s pensions gain first private equity exposure

WAMEX Private Equity Management has raised $55 million from Mexican institutional investors for a Mexican Stock Exchange-listed vehicle that will invest alongside a traditional private equity fund.

WAMEX, which was founded in 1999 in Mexico City, aims to raise a combined total of $120 million for the listed and parallel private equity funds, collectively dubbed Multinational Industrial Fund II.

The listed fund, structured as a certificado de capital de desarollo (CCD), enables Mexicos private pensions, or Afores, to invest directly in private equity for the first time. The 18 pensions have collective assets of about $100 billion, said WAMEX partner Jose Contreras.

We have been working for almost two years on opening up the framework so these pension funds can invest in alternative assets. Jose Contreras

“We have been working for almost two years on opening up the framework so these pension funds can invest in alternative assets,” Contreras told PEO. “The way we were able to do it was to create a public trust” from which the manager can draw down capital, he said. “The regulatory bodies wanted to have corporate governance and full disclosure and the only way [they felt appropriate] to do that was through the stock exchange.”

Credit Suisse placed the offering, which, according to regional journal Latin Finance, was taken up by five institutional investors. The newspaper noted WAMEX had initially hoped to raise around $75 million for the CCD.

Contreras said many local private equity fund managers are expected to follow suit with CCDs. Macquarie is among the groups expected to raise capital from Afores in this manner, according to Latin Finance, though it is unclear for what purpose. The journal noted the only other CCD raised since regulators approved the structure earlier this year, was one that was floated last month by the syndicate behind the FARAC toll road concession, Goldman Sachs and ICA. 

WAMEX’s first fund, which was launched in 2003, raised $66 million and did eight deals, half in manufacturing and half in service industries. Fund I has so far had three exits that have produced a 15 percent internal rate of return.