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LAVCA in the News

LAVCA Forum: Consorcio looks to double alternative assets, as region hits “breakeven point”

26 May 2010

By James Newman 

Business News Americas

May 26, 2010 – Chilean insurance group Consorcio is looking to nearly double its exposure to alternative assets, its chief investment officer told the Chile Private Equity and Venture Capital Forum on Wednesday (May 26) in Santiago, as panelists pointed to a regional “breakeven point” for private equity (PE).

Jose Miguel Ureta of Consorcio said at the event hosted by the Latin American Venture Capital Association (LAVCA) that the company wanted to have 4.5% of its investments in alternative assets, including PE and infrastructure funds, up from its current level of 2.5% and that the eventual goal could be as high as one-third in alternative assets.

Ureta credited growth in PE and alternative asset classes in Latin America since the 1990s to improving reputation, with successes like retailer La Polar in Chile, which private equity fund Southern Cross took control of in 1999, as well as growing foreign interest and a better regulatory environment.

“Ten years ago it was unthinkable that Stephen Schwarzman, Henry Kravitz or any other founder [of a big fund] would come to Chile,” Ureta said of the presence of Schwarzman, CEO of the Blackstone Group, as the forum’s keynote speaker, pointing to the investment opportunities that Latin America now provided for PE funds and the tougher economic conditions in developed countries as important reasons for the new foreign interest.

Joaquin Cortez, chief investment officer of AFP Provida (NYSE: PVD), which is owned by Spain’s BBVA (NYSE: BBVA), said Provida held just 0.24% in PE, but that this was also likely to grow, as institutional investors sought out more diversity in asset classes and in their own investment analysis.

Investment control officer of Peru’s banking, insurance and pension regulator SBS, Melvin Escudero, agreed, adding that the region had reached a breakeven point in PE in countries like Brazil, Peru, Chile, Mexico and Colombia, but that growing savings and investment in these countries would require more investment classes in order to avoid major capital outflows.