America’s Blackstone Group said it has raised $695 million from Mexican pension funds.
The private equity giant said the funds are for its first two local private equity funds, filings showed.
Blackstone disclosed in the statement Black Rock and KKR & Co
that were part of the fundraising to further expand in Mexico
Several of the world’s top private equity managers have quietly raised billions of dollars from Mexican pension funds, known as afores, since new rules were enacted early last year, filings to the Mexican Stock Exchange and a non-public document reviewed by Reuters showed. Regulators have authorized some managers to raise more over time.
It was not immediately clear how much in total has been raised to date in Mexico by equity managers, which include Discovery Capital Management, General Atlantic, Partners Group, Lexington Partners and HarbourVest Partners.
Their arrival in Latin America’s second-largest economy comes after a regulatory change in January 2018 that allowed foreign private equity managers to tap into $179 billion worth of pension fund assets for the first time and eased some restrictions on how pension funds invest their assets.
Mexico’s lower house of Congress is about to vote on a draft law by Mexican President Andres Manuel Lopez Obrador’s ruling National Regeneration Movement (MORENA) that would give pension funds further flexibility.
Blackstone Managing Director Matthew Pedley said in an interview that pension funds were taking advantage of the recent change in regulation to add exposure to international alternatives and diversify their portfolios.
Others consulted by Reuters on their funds in Mexico declined to be identified.
The private equity funds could help Mexican pension funds spread risk with international investments ranging from infrastructure to energy and special situations hedge funds.
Luis Sayeg, investment management director at Citibanamex, which manages one of the leading pension funds in the country, said the new funds could benefit pensions.
“It is a new opportunity to diversify the portfolio into alternative asset classes, with likely attractive returns, that do not necessarily exist in Mexico,” Sayeg said.
The draft law was praised by ratings agency Fitch although some critics have expressed concern that the government wants to tap pensions to help finance pet projects.