Foto: jacinta lluch valero
. Para el 80% de los inversores los beneficios de sus co inversiones superan a los de sus inversiones en fondos
Preqin’s latest survey of fund managers and investors examines the increasing appetite for co-investments among both parties. It finds that 80% of limited partners (LPs) have seen their co-investments outperforming private equity funds, with 46% seeing their co-investments outperform by a margin of over 5%. This level of performance is the biggest draw for investors, with two-thirds of LPs citing better returns as the biggest benefit of co-investing alongside GPs.
Co-investment opportunities from fund managers (GPs) are also becoming more common, with 87% of them either currently offering, or considering offering, co-investment rights to their investors. Furthermore, 30% of managers included co-investment rights in 81-100% of limited partnership agreements in their most recent fund. For fund managers, Co-investments are seen as a way to improve relationships with LPs, gain access to more capital for deals, and improve the chance of a successful fundraise.
“The most common motivation among LPs for co-investing beyond their typical fund commitments is the prospect of better returns, with many anticipating notably higher returns compared to their traditional private equity fund commitments. The majority of LPs surveyed have seen significant outperformance from their co-investments, although many say that it is too early to tell how their stakes will ultimately perform.
Direct investments, including co-investments, have increasingly become part of private equity discourse. Significant interest arising from LPs has been matched by increased co-investment opportunities provided by GPs. Provided LPs have sufficient resources available, co-investment opportunities should remain attractive due to their lower fees and greater potential returns.” Says Christopher Elvin – Head of Private Equity Products, Preqin.
Photo: Google . Who are the 15 most Relevant Latin American and US Offshore Private Banking Industry Professionals?
Terrapinn, in collaboration with Wealth Management Americas, has published a list of the 15 most influential industry professionals from private banking and wealth management in Latin America and US Offshore. Voters have valued excellence in customer service, in addition to wealth planning and preservation, and portfolio management. The ranking this year includes professionals from 14 private banks and four different countries; eight are located in Brazil; five based in the United States, with one professional in Mexico and another one in Switzerland.
Beatriz Sanchez, of Goldman Sachs, United States, was the highest ranked with 252 votes, closely followed by Emerson Pieri, of Barings Investments, Brazil, with 247, and Diego Pivoz, of HSBC USA, with 235. The Spaniard, Conchita Calderon of JP Morgan, Mexico, and Ernesto de La Fe, of Jeffries, United States, rounded out the top 5 with 211 and 198 votes respectively.
Between the fifth and tenth positions, are two industry professionals based in the United States, and three in Brazil: Gabriel Porzecanski, of HSBC, USA; Adriana Pineiro, of Morgan Stanley, USA; Renato Cohn, of BTG Pactual Brazil; Joao Albino Winkelmann, of Bradesco, Brazil; and Francisco J. Levy of UBS, Wealth Management Brazil.
Four other professionals based in Brazil, and the only one located in Switzerland to obtain a position in the ranking of the 15 most influential professionals, appear between the tenth and fifteenth positions: Charles Ferraz, of Itau Unibanco, Brazil; Guilhermo Morales, of Audi Bank, Switzerland; Raphael Guinle, of BTG Pactual, Brazil; Felipe Godard, of Deutsche Bank, Brazil; and Renato Roizenblit, of SLW Brazil.
The Wealth Management Americas 2015 forum, organized by Terrapinn, took place this week, with the participation of two of the professionals ranked in the top 5: Diego Pivoz, of HSBC, who shared his view on deregulation and transparency, and Ernesto de la Fe, of Jeffries, who talked about client relationship management, and how the private banking industry needs to adapt to the increasingly global presence of its clients.
Foto de Céline Colin
. Nicaragua Should Strengthen its Macroeconomic Policy Framework
The mission from the International Monetary Fund (IMF) that visited Managua last month, concluded that the country’s macroeconomic outlook is positive. However, the mission stressed the need to reinforce the policy framework in some areas in order to build buffers to face fiscal and external vulnerabilities.
The mission reviewed recent economic developments and discussed the economic prospects of Nicaragua, with officials from the Central Bank, the Ministry of Finance and Public Credit, and other members of the economic cabinet, as well as members of the economic commission of the National Assembly, business community and labor leaders, academic groups, and representatives of think tanks.
Gerardo Peraza, Head of the mission said, “Nicaragua continues to experience a favorable economic performance. The Gross Domestic Product (GDP) growth in the past three years has averaged 4.8 percent and is among the highest in the region. In 2014, the consolidated public sector deficit was 2 percent of GDP and public debt (including all the debt relief of the Highly Indebted Poor Countries Initiative) fell by 2.2 percentage points to 40.8 percent of GDP. The deficit of the external current account was reduced from 11 in 2013 to 7 percent of GDP, and international reserves increased to the equivalent of 4.1 months of imports excluding free trade zone imports.”
By end-2015, they expect GDP growth of 4 percent and, while inflation is projected at 3.5 percent. However, the deficit and the debt of the consolidated public sector are projected to rise, respectively, to 2.7 percent and about 42.5 percent of GDP in 2015. As well as that the external current account deficit will widen to 8 percent of GDP and that the coverage of international reserves will remain stable. For the medium term, the mission projects that GDP growth will converge to its potential level (about 4 percent) with inflation at about 7 percent annually.
The mission suggests an additional fiscal effort in 2017 to build fiscal buffers in case risks materialize; policy measures that could be considered include a reduction in tax exemptions and improved targeting of electricity subsidies to poor households. Looking further ahead, the mission recommends identifying economic measures to strengthen the financial viability of the social security institute, as well as maintaining an adequate level of international reserves remains a critical objective of macroeconomic policy. “This is crucial to reduce the vulnerability of the Nicaraguan economy to downturns in the global economy or abrupt changes either in the terms of trade or in the availability of external financing. The mission welcomes the central bank’s efforts to strengthen short-term liquidity management in the financial system. Moreover, the authorities should continue to monitor the rapid growth in credit and strengthen banking supervision,” said Peraza.
The mission also emphasizes the need to continue strengthening the statistical framework, continue strengthening the mechanisms to collect data, the procedures to monitor the quality of statistics, and the communication strategies. The IMF will continue assisting the authorities with these strengthening efforts.
KKR announced the appointment of Marcus Ralling as a director in KKR’s Real Estate team. In his role, Mr. Ralling will be responsible for the asset management of KKR’s European real estate portfolio.
Prior to KKR, Mr. Ralling was at Pramerica, as managing director and head of U.K. and European asset management, and joint head of asset management at Threadneedle Property Investments.
Guillaume Cassou, head of European real estate at KKR, said: “I am delighted that Marcus is joining the team based in London. As we continue to build our real estate effort in Europe and scale our real estate portfolio, Marcus’s knowledge and experience in asset management will be of great value.”
Marcus Ralling commented on his appointment: “I am excited to join an investment firm with such an outstanding global reputation. KKR’s growing presence and ambitions in real estate across Western Europe are particularly attractive.”
Since launching a dedicated real estate platform in 2011, KKR has committed over US$ 2.5 billion to 50 real estate transactions in the U.S., Europe and Asia as of September 30, 2015. The global real estate team consists of over 30 dedicated investment professionals.
Mirova, the Responsible Investment division of Natixis Asset Management, has published “Investing in a low-carbon economy”, a guide for investors to become COP21 compliant. Mirova’s study provides an in-depth analysis highlighting the challenges of climate change and presents methods for investors to effectively measure their carbon footprint. Mirova offers a unique range of investment solutions promoting energy transition across all asset classes.
COP21: mobilising private investors is a necessity
To maintain the economy in a “2 degree” trajectory, it is vital to redirect savings towards companies and projects promoting energy transition.
Philippe Zaouati, Head of Mirova explains: “The energy transition can only succeed if we manage to mobilise private investors’ savings. The success of COP21 therefore also depends on the ability of asset management firms to propose solutions in response to the climate challenge, whilst delivering the returns expected by investors”.
Accurately measuring your carbon footprint
In response to growing demands on investors to make greener investments, Mirova, in partnership with the leading carbon strategy specialist consultant Carbone 4, has developed an innovative methodology to measure the carbon footprint of an investment portfolio. This decision-making tool assesses a company’s contribution to the reduction of global greenhouse gas emissions (GGE).
Hervé Guez, Head of Mirova Responsible Investing, comments: “Measuring the overall impact of a business on the environment is an essential step towards acting against global warming. Assessing the carbon footprint is therefore a indispensable stage in the construction of portfolios contributing to energy transition”.
Low-carbon investments across all asset classes
In order to redirect capital towards investments promoting energy transition, Mirova is proposing solutions involving all asset classes:
Renewable energy infrastructures: 100% low carbon allocation. For more than 10 years now, Mirova has provided European institutions with access to investments in project companies based on renewable energy assets in France and Europe. Mirova’s renewable energies funds have generated 730 MW of new production capacity and contributed to avoiding 1.4 million of CO2 emissions.
Green bonds: a direct link between financing and projects: Mirova was one of the first asset management firms in the world to launch a green bond product. By financing tangible assets and ensuring transparency regarding the deployment of the capital raised, green bonds enable issuers to diversify their investor bases, while enabling investors to actively participate in financing the energy transition.
Listed equities: committed theme-based asset management: Mirova proposes fundamental conviction-based asset management covering European and global equities, focusing on companies providing sustainable development solutions.
Foto de Ron Frazier. ¿Dónde están las oportunidades en los Commodities?
During the past year, commodities have been the most challenged asset class. A slower global growth, lower inflation expectations and a strong dollar are some of the factors that have affected their price. Excess supply in many commodities is also contributing to the weakness. Given that most of these factors are likely to remain in place through the remainder of this year, prices may need to move even lower. Alternatively, fundamentals need to start to improve before the asset class becomes a genuine bargain. Many investors are conflicted about what their next move should be.
Amongst commodities, cyclical ones such as oil and industrial metals, have suffered the most. In the energy sector supply has played a key role in these losses. Today, the United States produces roughly 700,000 barrels per day more than one year ago. Meanwhile, following the tentative nuclear accord with Iran, many Gulf States are ramping up their own production. According to the International Energy Agency (IEA), which México has just recently requested to enter, oil inventories in developed countries have expanded to a record of almost 3 billion barrels because of massive supplies from both non-OPEC and OPEC producers. So, without a sharp reduction in production it is hard to imagine a strong rebound in the short run; however, for longer term investors, some bargains are beginning to emerge.
When looking to gain commodity exposure, one has to be very selective. Nowadays most commodity-related sectors look cheap, but in many instances the plunge in valuations merely tracks the drop in earnings and profitability. How can an investor assess if commodity companies are cheap or cheap for a reason?
Historically, valuations track profitability as measured by return-on- equity (ROE). At the energy and materials sector levels, data suggests that the fall in stock prices is generally in line with the drop in profitability. However, digging deeper at the industry level, opportunities might be appearing: while it appears storage and transport companies are still overvalued relative to the drop in equity, drillers and integrated companies look somewhat cheap (see chart below).
Looking next at materials, there are fewer obvious industries where valuations depart significantly from profitability, but metal and mining companies are starting to show more value.
However, one must not forget that the uncertainty surrounding market bottoms, particularly in a sector prone to volatility and abrupt changes in supply and demand, makes it hard to confirm the bottom has been reached. Furthermore, in the current scenario, low inflation expectations also make forecasting returns more difficult as many investors view commodities as a hedge against inflation.
Although the near-term outlook for most commodities remains modest, if the futures curve is correct, at some point, arguably in the next year or so, rising demand will start to bring markets back into balance. Until then, it is still probably too early to call a bottom.
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This material is for educational purposes only and does not constitute investment advice nor an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. If any funds are mentioned or inferred to in this material, it is possible that some or all of the funds have not been registered with the securities regulator in any Latin American and Iberian country and thus might not be publicly offered within any such country. The securities regulators of such countries have not confirmed the accuracy of any information contained herein.
Photo by Christopher Bowns
. The A's that Acccording to Henderson, Move the Tech World
According to Alison Porter, portfolio manager with Henderson’s Global Technology Team, Apple, Alphabet (previously Google) and Amazon are three three key holdings “in a ‘winner takes most’ world.”
Following the release of the companies’ latest quarterly earnings results, Porter states that after the first quarter for Google as Alphabet, the company offers exposure to a number of powerful internet themes, including online video, programmatic advertising, paperless payments, mobile internet and several ‘other bets’ that could drive significant value in the future, including Nest (smart home appliances), its leading position in self-driving cars, Calico (life sciences) and Google Ventures (venture capital arm, which includes stakes in companies such as Uber). “In our view, the strength of Google’s position in mobile is underappreciated… We think investors will place a value on the company’s other ventures despite them currently being loss makers, and also award the core Google business a higher valuation.”
In regards to Apple, one of their main holdings, Henderson considers that the company “is currently valued as a ‘one product cyclical company’, which we believe undervalues the Apple eco-system.” Henderson expects sales growth of the iPhone 6 to slow from 28% in 2015 to around 6% in 2016. Nevertheless, they trust Apple will be able to take advantage of new markets.
When it comes to Amazon, better tan expected revenue and operating profit guidance consolidate Amazon’s dominance in its core businesses of ecommerce and cloud services − which are both large and rapidly growing markets where Amazon still has low market share. Henderson highlights Amazon Prime as an área of opportunity along with Amazon Web Services (AWS) is taking market share from traditional hardware companies such as IBM and EMC but now also increasingly from software companies such as Oracle.
“Technology tends to be a sector where the winner takes most market share and companies with the strongest barriers to entry such as Apple, Alphabet and Amazon are the most likely to benefit. The team is confident these three companies are well positioned in a low growth environment to grow profitably and reward investors.” concludes Porter.
You can read the full report in the following link.
While the International Monetary Fund will decide later this month if the Renminbi (RMB) joins their Special Drawing Right (SDR) basket this year, Axa Investment Management’s Aidan Yao and Jason Pang think the Chinese currency stands a very high chance (80%) of being included in it, making the RMB the fifth reserve currency.
According to the analysts, “this will trigger a direct rebalancing of the SDR portfolio, but we think the seal of approval by the IMF on the RMB’s reserve currency status will also affect the investment decisions of other investors.” They estimate, subject to significant uncertainties, and contingent on the unfolding of their baseline case of economic soft-landing without large scale financial crisis, that inclusion would trigger an aggregate inflow of up to $600 billion from supranational, official and private investors over the next five years. Averaging $120 billion per year starting from 2016.
Pang and Yao believe that the capital inflows will likely have an important impact on China’s currency, money and bond markets in the coming years. In regards to currency they anticipate that in the short run, the RMB will maintain some degree of stability in normal market conditions and that in the longer run, there is a chance the exchange rate will mutate from the semi-crawling peg to a managed float as the end-game. While when it ocmes to the Bond Market, the analysts’ base-case scenario is a constructive outlook for the bond market, driven by increased demand from the SDR inclusion, and supported by lower GDP growth and policy easing.
The IMF’s executive board will vote on inclusion on November 30.
You can read the full report in the following link.
Foto: Evan Jackson
. Private Equity: suben salarios y bonus, mientras las compañías compiten por el talento
Preqin’s 2016 Private Equity Compensation and Employment Review found that 74% of private equity fund managers have made firm-wide increases in base salary from 2014 to 2015. The average increase in salary was 7%, with 14% of firms increasing base salaries by more than 10%.
Almost half (46%) of firms increased their performance-related cash bonus pay-outs in 2014, up from 26% of firms that increased bonuses in the previous year. The median bonus pay-out increase in 2014 was 20%, while only 16% of firms reported a decrease in the levels of cash bonuses paid to employees.
From 2015 to 2016,76% of surveyed firms plan to increase their firm-wide base salary, while 22% predict no change in pay rates. Only 2% of firms anticipate reducing base salaries next year.
Other findings of the survey include that private equity firms in the Asia-Pacific region have the highest median proportion of women, at 40% of total staff. Women represent a median 35% and 33% of staff respectively at Europe- and US-based firms, while at South America-based firms women comprise a median of only 15% of total staff.
“2015 seems to have been a good year for employees of private equity firms, with salaries and cash bonuses both increasing. At more senior levels, the largest firms will vie to attract top talent by offering rates of compensation that smaller firms may struggle to match. Similarly, the location, structure and strategy of a firm can all affect the available pool of talent and the number of opportunities available. With many firms planning to increase their staff numbers and base salaries again in 2016, competition for talent looks set to continue, as firms seek to attract new recruits while retaining current staff.” said Selina Sy, Manager – Premium Publications.
625 new fund managers entered the private equity market with a 2015 vintage fund, the highest number ever. There are now over 7,400 active private equity firms tracked by Preqin, including over 600 private debt firms. Altogether, private equity fund managers employ an estimated 145,000 people worldwide. Buyout, venture capital and real estate firms comprise 68% of that total. Firms with $10bn or more in AUM have an average of 160 staff, while firms with less than $250mn AUM have an average of 14.
Total fundraising for private equity firms in 2015 YTD stood at $362bn at the end of Q3 and seems broadly on track to match the $552bn raised globally in 2014. The record year for private equity fundraising is still 2008, when funds closed raised an aggregate $688bn in capital commitments.
Preqin’s 2016 Private Equity Compensation and Employment Review surveyed almost 200 private equity firms to gather key trends and figures in levels of pay and staffing in the industry.
The Standard Life Investments European Property Growth Fund (“EPGF”) has completed the sale of Torre Zen, an office building in the Parque das Nacoes “Expo” area of Lisbon. The disposal is part of a strategic rebalancing of the fund’s portfolio, and proceeds of the sale will be reinvested in other European real estate markets where the economic recovery is increasing occupier demand and rents.
Torre Zen is a modern 11,400 sq m office building, acquired by the fund in 2003. It has 13 floors of offices plus three retail units on the ground floor. Current tenants include Danone, Upstar Communications, UHU, TNT and A Padaria Portuguesa.
Veronica Gallo-Alvarez, Fund Manager of the Standard Life Investments European Property Growth Fund, said: “This meets our current strategy to dispose of assets in non-core markets in order to invest in prime assets within recovery markets, such as The Netherlands, Spain and Ireland, where we can deliver strong returns for investors.”
