Category: Funds

Emerging Market bond funds saw inflows of $598m in the week ended January 11, according to EPFR, bringing the total assets under management for that group to $69.5bn. “The common theme for most of these fund groups [that saw inflows] is heavy investor selling last year,” says EPFR analyst Cameron Brandt. “It seems that, despite the post-Christmas chill in the markets, there is still a real appetite for asset groups that investors think might be oversold.” Performance for EM Debt funds as measured by Lipper was positive in the week, rising 0.26%, in line with the average performance of the World Income funds group. In the year EM Debt is up 1.19%.

Flows into LatAm equity surged in 2007, led by a dramatic pickup in allocations to Brazil funds in 2007, according to EPFR. LatAm saw inflows of $10.2bn in the year, compared to $3.3bn in 2006. Brazil accounted for $4.4bn of those flows, a figure that represents a nearly six fold increase from the $747m that flowed into the country in 2006, and which topped the list of net inflows in emerging market countries this past year. LatAm also had the best performance within the major EM fund regional groups, posting a collective gain of 59.9%. “While it was Latin America Equity and Brazil Country Funds that led the charge into the fourth quarter, GEM, BRICs Equity and Russia Country Funds were the ones with momentum going into 2008,” according to EPFR. “In the case of the GEM funds 78% of their 2007 net inflows came in 4Q07, while flows into both Russia Country and BRIC funds were modestly negative through 9M07.”

Flows into LatAm equity surged in 2007, led by a dramatic pickup in allocations to Brazil funds, according to EPFR. LatAm saw inflows of $10.2bn in the year, compared to $3.3bn in 2006. Brazil accounted for $4.4bn of those flows, a figure that represents a six fold increase from the $747m that flowed into the country in 2006, and which topped the list of net inflows in emerging market countries this past year. LatAm also had the best performance within the major EM fund regional groups, posting a collective gain of 59.9%. “While it was Latin America Equity and Brazil Country Funds that led the charge into the fourth quarter, GEM, BRICs Equity and Russia Country Funds were the ones with momentum going into 2008,” according to EPFR. “In the case of the GEM funds 78% of their 2007 net inflows came in 4Q07, while flows into both Russia Country and BRIC funds were modestly negative through 9M07.”

Private equity investor Conduit Capital Partners has completed the sale of two portfolio companies to undisclosed buyers. It sold Jamaica Energy Partners, consisting of 125MW of diesel-fired generating facilities on two barges, for $92.5m and Mamonal, a 90MW gas-fired plant near Cartagena, Colombia, for $17.5m. The firm also agreed to sell a 13.2% ownership stake in Aguaytia in Peru for an undisclosed sum. The three deals leave the firm’s Latin Power I fund fully liquidated and Latin Power II with one remaining asset. BNP Paribas advised on the sales.

Despite the rout, geographically diversified global emerging markets (GEM) funds tracked by EPFR Global had their best week ever last week, both in dollar and percentage terms. “In recent years the fourth quarter has been the sweet spot for flows into emerging markets funds,” says EPFR Global md Brad Durham. “That’s the case again this year: fourth quarter inflows into these funds currently account for 57% of the year-to-date total.” A record-setting $3.37bn flowed into GEM Equity, according to the service, which tracked flows through December 14. LatAm equity funds received $489m in the period, fueled by appetite for more liquid markets. BRIC equity funds absorbed $985m, their best week since late Q1 2006. EM bond funds meanwhile saw modest inflows, while investors pulled over $600m out of global bond funds as risk appetite continued to increase, says EPFR. EPFR Global tracks both traditional and alternative funds domiciled globally with $10trn in assets.

Harvard Management Company (HMC), which manages the university’s $35bn endowment, has purchased a 12.5% stake in Rio de Janeiro-based Gavea Investimentos, marking a significant endorsement for Brazil’s highest profile hedge fund. HMC has been an investor in Gavea’s private equity funds for some years already and has had a relationship with a number of the firm’s partners, including founder Arminio Fraga. The 12.5% stake, whose value is undisclosed, makes HMC a partner in Gavea, but will not give it license to influence the investment strategy. Gavea manages $5.5bn across various strategies, including hedge funds and illiquid investments. The HMC capital injection will be invested directly into the fund, a Gavea partner tells LatinFinance. “For us, it’s a world class partner to have alongside us to help us continue to grow as an asset management firm,” says the executive. HMC is run by Robert Kaplan, formerly of Goldman Sachs, who took over as interim CEO following the premature departure of Mohamed El-Erian, who in September said he will return to PIMCO.

Private equity firm Conduit Capital Partners has sold its 70% stake in Inelec, a 52MW portfolio of three hydroelectric power plants in Western Mexico to a subsidiary of Italy’s Enel for $156m. The assets, which include the Trojes, Chilatan and El Gallo facilities in Jalisco, Michoacan and Guerrero, respectively, come from its Latin Power II fund. The fund is also said to be negotiating the sale of a Jamaican asset, which if closed, would see it enter 2008 with just one asset remaining to divest. BNP Paribas was financial advisor on the Mexican sale.

Flows into LatAm equity funds have rebounded, with those investors absorbing $467.8m inflows in the first week of December, according to EPFR Global. “Risk appetite returned, at least among some sources of capital, during the first week of December as EPFR Global-tracked emerging markets equity funds had their best week of the year in dollar terms, Financial Sector Funds absorbed another $1bn and High Yield Bond Funds posted inflows for the first time in six weeks,” says the fund tracker. “But plenty of investors remain cautious: Money Market Funds, a proxy for cash, took in another $21.3bn,” it adds. Year-to-date, LatAm equity funds are sitting on average gains of over 63% and net inflows stand at 306% of the total for 2006, says EPFR. Equity funds geared to US, Japan and Europe have lost $45.9bn since the first week of August. During that same period EM funds took in a net $26.9bn. “Some of that is still attributable to the fact developed markets have more direct exposure to the US sub-prime debt crisis, and some to the fact another US rate cut – if it happens – is going it hit Japanese and European export competitiveness,” says EPFR Global senior analyst Cameron Brandt. “But much of it boils down to basic performance. The average Asia ex-Japan Equity Fund’s year-to-date portfolio gain is nearly eight times larger than the 7.3% returned by their US Equity Fund counterparts and 11 times greater than the average gain posted by Global Bond Funds.”

Conduit Capital is launching a new infrastructure fund to invest in areas like transportation, according to managing partner Scott Swensen. Although more than a year from launch, he says the $800m-$1bn fund will consider projects such as airports and seaports, but likely not toll roads. “We’re considering broadening into new infrastructure,” Swensen told LatinFinance’s Innovation in Latin American Infrastructure Finance seminar in Miami. Conduit has in the past dealt only in power and gas pipeline projects. “Local markets are more developed, inflation is now under better control and we have a lot more tolerance for currency risk,” says the investor. Conduit is a private equity fund that invests in LatAm and the Caribbean.

EM bond funds lost $250m in the week to November 28, according to EPFR Global, amid a flight from riskier fixed income assets. EM funds geared to hard currency debt accounted for 85% of the outflows. High yield bond funds meanwhile lost $833m. EM debt funds have returned 4.66% this year, less than short and intermediate US Treasury funds group tracked by Lipper, which have YTD returned 7.31% on average overall. EM debt is also trailing global income and international income funds tracked by Lipper, two groups that have underperformed EM for most of this year. Those two groups have returned 7.13% and 9.13% this year, respectively, overall.