Category: Funds

Institutional investors’ interest in emerging markets private equity continues to grow, according to a survey released Friday by Emerging Markets Private Equity Association (EMPEA). The 2007 report shows that 78% of limited partners (LPs) surveyed expect to increase commitments to emerging markets private equity over the next five years, up from 65% of LPs last year. And while they plan to ramp up investments across all emerging markets, 64% of them expect to be investing in Latin America by 2012, set against 31% currently. They predict private equity in EM will produce returns at a 5.4% premium over US buyouts and forecast outperformance relative to developed market funds over the same period.

Shareholders in Brazilian steelmaker Usiminas raised $885m in a secondary offer through Merrill Lynch Wednesday. Brazilian miner CVRD, and Previ, Banco do Brasil’s employee pension fund, sold 16.399m common shares at BRL110.00 or $53.97 a share. CVRD sold 12.035m common shares, while Previ sold 4.365m common shares. Dealogic estimates that the shares priced at a 3% discount to the previous day’s trade of BRL113.45.

Peru’s private pension fund administrators (AFPs) will be allowed to invest up to 13.5% of their assets abroad, according to a decision by the country’s Central Bank which sets their operating limit. The AFPs continue to benefit from the liberalization of the rules governing their investment universe which have seen their options increase. Last year, for the first time, the country’s four AFPs were allowed to invest in sub-investment grade securities (below BBB-).

Chile’s pension fund regulator, SAFP, has given its approval for the establishment of a new pension fund manager (AFP) by Pablo Navarro. This will be the first new AFP set up in Chile in 12 years and has been provisionally called AFP Modelo. It will the first such fund to operate via the internet in a drive to keep costs low and will use technology provided by Sonda, the IT company owned by the Navarro family. The company will have a start-up capital of 1.2 billion pesos ($2.21 million) and hopes to have 60,000 contributors by 2010.

Brazilian aircraft manufacturer Embraer is also seeking to sell shares via a secondary offering. The 43.3 million common shares will be sold by pension funds Previ and Sistel, who will be selling off part of their holdings in the company. The sale is expected to raise an estimated $460 million with shares offered in Brazil and as ADRs in the US. JPMorgan Chase will coordinate the transaction.

Conduit Capital Partners, a New York-based private equity firm focused on the independent electric power industry in Latin America and the Caribbean is planning to sell the assets of its first two private equity funds, Latin Power I and Latin Power II. The portfolios contain assets in Jamaica, Mexico, Colombia and Peru. Latin Power I was closed in 1993 with $100 million of committed capital and Latin Power II was closed in 1998 with $157 million of committed capital. Conduit is presently investing its $393 million Latin Power III fund, the largest private equity fund investing in the region, according to the company. Conduit has retained BNP Paribas as exclusive financial advisor for the divestiture.

Merrill Lynch Global Private Equity (MLGPE) has acquired Mexican plastics manufacturer Convermex from JP Morgan Partners (JPMP) and other investors for an undisclosed sum. Convermex is the leading supplier of disposable plastic tableware in the local market and has five plants and 18 distribution centers across the country. Merrill Lynch says that the local market offers plenty of growth potential because of favorable macroeconomic conditions and socio-demographic trends. Merrill Lynch and JP Morgan Securities acted as exclusive financial advisors to MLGPE and JPMP, respectively.

The high charges made by Mexico’s banks and private pension funds (Afores) have finally attracted the attention of the country’s anti-monopolies regulator, Comisión Federal de Competencia (CFC). The regulator has said it is to investigate a possible lack of competition in the financial sector leading to the charges – the highest in Latin America. CFC said it would be publishing its finding on the Afores in about a month and on the banking sector in the first quarter of next year. Last month, ECLAC – the UN’s Economic Commission for Latin America – published a damning report on Mexico’s banking sector, concluding that the lack of competition in the market provided conditions for “implicit collusion” by banks to keep consumer charges high.

Mexico’s pension regulator, Consar, has given the go ahead to the country’s pension funds (Afores) to invest in the local IMC-30 index of mid-cap stocks. It was only last year that the funds were allowed to buy equities and foreign bonds to hold in their investment portfolios. They represent one of Mexico’s largest group of institutional investors and held $61 billion of assets under management as at the end of August.

India and Cuba have signed an oil exploration agreement via their state-owned oil entities – Oil and Natural Gas Corporation (ONGC) and Cuba Petróleo (CUPET). The agreement allows for shared exploration and exploitation of around 4,300 square kilometers in Cuba’s Exclusive Economic Zone in the Gulf of Mexico.