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Fund of Funds Mexico II Offers a Diversification Option for Afores

24 May 2012

(Funds Americas) May 24, 2012 – In an interview with Funds Americas, Dr. Felipe Vilá González, Director-General of Fund of Funds, spoke of the company’s new initiatives, its plans for new funds and the overall outlook for the sector.

Fondo de Fondos (Fund of Funds), continuing its campaign to improve the private and venture capital industry, has scheduled for June 2012 the launch of its Fund of Funds Mexico II, with which it hopes to attract capital investment of approximately US$500 million.

Dr. Felipe Vilá González, Managing Director of Fondo de Fondos, told Funds Americas that the new fund will implement an innovative strategy whereby 80% of its resources will be focused on 30 positions having a minimum investment of US$5 million and a maximum of US$30 million, the remaining 20% being invested directly in the companies financed by the funds, at amounts varying from one US$1 to 7 million.

The fund of funds Mexico II will invest in private equity funds, real estate funds, infrastructure funds and mezzanine funds over the coming five years. Its target is to attract investment capital totalling US$500 million, to which Corporación Mexicana de Inversiones de Capital (CMIC) will contribute 100 m, another 100 m will come from its strategic alliance partners, while the rest will be sourced from the Mexican State pension schemes (Afores), by means of purchases of Capital Development Certificates (CKDs) for an amount of up to 5 billion Mexican pesos. According to AMEXCAP, “the Afores have invested up to 2.5% of their assets in CKDs, of which 20% have gone to Private Equity CKDs”, meaning that this issue is a viable diversification option.

In reference to private equity funds, real estate and infrastructure, Vilá González explained that since 2006 the industry has grown dynamically, with the result that the number of funds has increased by a factor of three between the years 2006 and 2011, while the volume of assets under management (AUM) has risen four times. He said: “Despite the dynamism, the number of funds still trails the capacity of the Mexican economy, so that this dynamism is likely to continue. I would say that, given the size of the industry, this outlook and level of activity will remain in place for the next 4 to 5 years.”