Wikimedia CommonsGustavo Lozano, director general de Pioneer Investments in Mexico. El mandato de Afore Sura abre nuevas oportunidades a Pioneer Investments en México
Q&A session with Gustavo Lozano, managing director of Pioneer Investments in Mexico, after Afore Sura announced its decision to give Pioneer Investments a mandate to manage an international equity portfolio.
What does Afore Sura mandate mean for the Pioneer Investments group of companies?
Being selected to manage an international equity investment portfolio for Sura is a direct result and materialization of efforts dating back a couple of years, when it was decided (for Pioneer Investments) to invest and expand into emerging markets as a keystrategy for the group. The increasing role of these countries, their expanding middle class, internal savings and economic stability have been determinant factors that underscore Pioneer Investments view.
Pioneer Investments recently opened an office in Mexico which is one of the key initiatives of its growth strategy, and this new and early opportunity with Sura speaks volumes in terms of the ability of the group to offer a viable, original and competitive strategy to Sura. Pioneer Investments’ track record in the industry, team approachand cohesion were very important factors that Sura valued. The group’s history and experience of over 85 years enables it to enrich the relationship with Sura through cooperation that will solidify and help in the local asset management industry development.
Will Pioneer Investments’ strategy and bet change in Mexico now?
No, quite the contrary. This event underscores that we are on the correct path into the solidification of our expansion into emerging markets and most particular throughout Latin America. Our aim would be to connect the capabilities in investment management Pioneer Investments has across a range of strategies with Mexican institutional clients who demand those products.
How do you think this mandate will affect? Will it change the setting of the different market players?
Every time there is a new asset class incorporated to any investment regime, it takes time to close and execute the first deals. We think this new deal will serve as a catalyst for others to join.
Speaking about institutional asset managers, the need to externalize investments that target other geographies is general. There’s no human capacity that can cover all investment regions and classes, but the need to diversify will grow.
Also we are going through very particular times in which liquidity is seeking options to recover income potential, causing the review of investment strategies. We believe that pensions will need to bring to their clients diversification options as a strategic part of their portfolio. This is particularly important in Mexico’s market as holdings are growing at a 16% YoY pace that markets can’t keep up with, so we will see a growing need to export savings just as it happened in other countries before.
With the mandate in the group’s hands, does the group intend to compete for others?
Certainly, our project in Mexico is a long term commitment. The group is looking forward to bringing its experience and strengths to Mexico’s institutional client base. We believe that we have an excellent investment process and high quality institutional strategies that are well suited for the market here. Having a local presence is proof of our resolve.
Investment needs call for diversification. We see growing savings creation in the country. We are sure more clients, not necessarily from the pension management side but also others in the asset management arena, will open their architectures and will bring to their clients the best of their administration along with the best of the international managersworld.
We believe that Pioneer Investments will be a solid front runner competitor.
Wikimedia CommonsGabriel Politzer, nuevo jefe de Gestión de Activos y director de Estrategia. BigSur contrata a Gabriel Politzer como jefe de Gestión de Activos y director de Estrategia
Gabriel Politzer will be joining the BigSur Team in Miami as Head of Asset Management and Chief Strategy Officer. He has over 30 years of expertise at leading financial institutions, including JPMorgan, UBS and ING. Politzer has extensive experience in trading and investing in several asset classes, and has also served as an advisor to several senior government officials, including ministers of finance and Central Bank governors. He served as Chief Strategy Officer of Patagon, an equity brokerage and online banking firm in the U.S., Europe and Latin America, which was sold to Grupo Santander for $750mm in 2001, reported the firm to Funds Society.
Over the past five years, Big Sur main focus has been on building the best internal platform for their client families and creating a dynamic team which fully represents their values. While they will continue to put forth effort on the improvement of their platform- they are ready to start focusing on growing their business. Gabriel will help with both the improvement of the platform and growing of BigSur’s business. He will help enhance the risk control and efficiency of their investment process, further strengthening their investment platform. Gabriel will be a key player in BigSur’s Strategic Plan for growth, focusing on implementing strategy as well as creating initiatives which would bring extra capacity (allow for scalability) or bring new/incremental sources of revenue.
BigSur is enriching the intellectual capital of their platform and team by bringing someone of Gabriel’s profile and experience. As they aim to be a leading global multi family office, they believe in hiring talented and dedicated professionals such as Gabriel to help build a better BigSur.
Wikimedia CommonsFoto: Andreas Tusche. One Thousand & One Voices invierte 300 millones de dólares en crear riqueza en mercados emergentes
One Thousand & One Voices (1K1V), a movement of influential families investing relational, intellectual and patient financial capital to profitably accelerate prosperity in developing markets, today announced its formation. The announcement is being made in Cape Town in conjunction with the World Economic Forum on Africa.
Influential families conceived of 1K1V to help increase economic opportunity for families in developing markets. Each family’s capital is three-dimensional: relational capital leverages member family connections and reputation, intellectual capital leverages their business and industry knowledge, and patient financial capital provides the funding that developing-market businesses need to grow.
“One Thousand & One Voices was established with the belief that the pathway to economic freedom — real prosperity for millions living in poverty — is through values-based private investment grounded in the time-tested principles of free enterprise,” said Dr. John Coors, chief executive officer of technical ceramics company CoorsTek and one of the movement’s initial family members.
1K1V intends to deploy $300 million in sub-Saharan Africa and similar or larger amounts in other geographies. Although 1KIV’s initial focus is sub-Saharan Africa – a region now experiencing robust economic growth but one that carries a substantial legacy of poverty, inefficiency, and undercapitalization – the movement is expected thereafter to focus on Latin America, Southeast Asia and Eastern Europe. 1K1V expects to use leading edge, proprietary tools to predict, measure and report impact.
1K1V’s model was designed to provide financial capital that is sufficiently patient to accelerate prosperity in developing markets, addressing a major shortcoming of traditional private equity and many impact investment funds operating today. 1K1V does not impose arbitrary limits on the duration of its investments, making it possible to provide capital that is as patient as may be required, which reduces the risk of impaired returns due to forced exits.
Foto: Akarsh Simha. Sumitomo Mitsui Financial Group, autorizado para operar como holding financiero en EE.UU.
Sumitomo Mitsui Financial Group (SMFG, presidente Koichi Miyata) and Sumitomo Misui Banking Corporation (president: Takeshi Kunibe) have received notification from the Board of Governors of the Federal Reserve System that our elections to become Financial Holding Companies (FHC) under the U.S. Bank Holding Company Act are effective as of May 7, 2013, said the firm in a statement.
SMFG has to date, engaged in intestment banking and securities business in the U.S., such as M&A advisory and brokerage services, through a U.S. subsidary. By obtaining FHC status, SMFG can significantly expand the scope of services we provide in the U.S. including the underwriting and trading of securities and other investment banking services.
SMFG plans to implement numerous iniciatives in the near future, including the underwriting of bonds by its subsidiaries, to futher enhance the services offered to clients in the U.S., the world´s leading financial market.
Pedro A. Jiménez, Partner-in-Charge. Jones Day opens in Miami as part of Latin America practice expansion
The global law firm Jones Day announced today that it will open an office in Miami, the firm’s first office in Florida, 16th in the US, and 40th in the world. Pedro A. Jimenez, a Miami native and partner in Jones Day’s Business Restructuring & Reorganization practice, will serve as Partner-in-Charge. Enrique (Rick) Martin, who recently joined Jones Day as a partner in the Mergers & Acquisitions practice, will serve as the Office’s Administrative Partner in Miami.
“The Mexican market is maturing and internationalizing at a rapid very pace, and as it has, our Mexico City office has continued to grow and expand its reach.”
The firm’s expansion to Miami reflects its continuing commitment to the rapidly growing Latin America market. The firm established offices in Mexico City in 2009 and São Paulo in 2011, but its clients’ needs in the remaining 18 countries in the region also can be met most effectively from Miami. The office will focus on capital markets, mergers and acquisitions, lending, project finance, and restructuring in Latin America. It will, in addition, have a significant focus on dispute resolution, including litigation, arbitration, issues and appeals, labor and employment, intellectual property, executive compensation, and health care.
“In years past, the Latin American practices of many major law firms, including Jones Day, were centered in New York City, primarily to access the debt and equity markets,” said Steve Brogan, Managing Partner of Jones Day. “Today, corporate and business leaders in Latin America have increasingly made Miami their point of contact in the U.S. Along with our substantial capabilities in Mexico and Brazil, a presence in Miami allows us to establish a deep bench of gifted lawyers who can effectively guide our clients seeking to do business in the region. An equally important reason for opening in Miami is to handle the growing litigation docket coming out of that state. Over the last half decade, Jones Day lawyers have tried more significant civil cases to verdict in Florida than any other leading law firm in the country. Our office in Miami will be staffed by lawyers who have the experience and ability to try cases throughout Florida.”
“The Mexican market is maturing and internationalizing at a rapid very pace, and as it has, our Mexico City office has continued to grow and expand its reach,” said Fernando de Ovando, Partner-in-Charge of Jones Day’s Mexico City office. “Our office in Miami will be an ideal location to assist clients in outbound and inbound transactions and disputes, and efficiently serve clients in a wide range of matters throughout Latin America.”
Wikimedia CommonsFoto: Mewiki. El mercado laboral de la City recupera el pulso tras la crisis de Chipre
City of London employers have recovered their nerve following the Cyprus crisis, with the number of new jobs rising 19% in the last month says Astbury Marsden, a financial services recruitment firm. Just over 2,600 new roles were created during April 2013, following a sharp dip in March when the number of new roles plunged by 15% compared to the previous month.
The number of new City roles created per month now stands at its highest since October 2012, with month on month increases also recorded in January (213%) and February (3%). Mark Cameron, Chief Operating Officer at Astbury Marsden, says: “After a reasonably optimistic start to the year, recruitment at many City firms slowed in March as the market waited to see how bad the Cyprus crisis was going to get.”
Astbury Marsden points out that City staff also seem to be cautious about switching employer. In April, candidate numbers were up just 1% on March with a pool of 4,560 potential candidates during April, down by 24% on the same time last year. There are now 1.75 qualified candidates per new role, down from the 12 month average of 2. Mark Cameron adds: “Spring is traditionally peak hiring season in the City as candidates look for new roles after their bonus has been paid. However, we are not seeing quite the same amount of interest from prospective candidates as had been the case in previous years.”
Mark Cameron adds: “Spring is traditionally peak hiring season in the City as candidates look for new roles after their bonus has been paid. However, we are not seeing quite the same amount of interest from prospective candidates as had been the case in previous years.”
Astbury Marsden explain that regulation is still driving recruitment in the City, as banks focus on trimming their businesses back to their most profitable areas in order to manage new capital requirements. Says Mark Cameron: “the banks have a lot of work to do on realigning their businesses back to the most profitable core areas, so we are still seeing a lot of interest in strategists and for skills associated with managing organisational change.”
“A natural consequence of the high-level planning that is going on is that a lot of the other hiring activity is ‘maintenance’ work – finding replacements or acquiring individual high flyers. We don’t expect to see more aggressive hiring resume until banks have clear plans as to which areas they are going to target for growth.”
Wikimedia CommonsYves Bonzon, CIO de Pictet. Los hedge funds, ¿siguen siendo convenientes?
Hedge Funds have performed poorly for the last three years compared to treasuries and corporate bonds, therefore people are questioning their relevance in portfolios. “We believe there’s a place in each portfolio for this kind of investment as long as it is allocated in the relevant asset class and, most importantly, when the mangers are carefully selected fort their skills and capacity to deliver performance”, says Pictet CIO, Yves Bonzon, in this video.
Investment banking faces a leaner, humbler future, says Jonathan Rosenthal, in a Special Report about International Investment Banking published by The Economist, though a select few banks will emerge from the financial crisis even larger and more powerful.
The report posts that revenues in investment banking have shrank from US$350 billion in 2009 to US$250 billion last year, a massive drop that has more to it than the typical cyclical factors.
According to Rosenthal, new regulation, such as Basel III and derivatives regulation is to blame. Investment banking is becoming a less profitable business forcing several players to quit the market. The problem is that big banks post big systemic risks, and regulators would not approve mega mergers in the sector. In the recorded interview Rosenthal explains how European banks are facing stricter capital requirements and as they cannot sell their investment banking business to other players, they are simply being forced out of the business, as has happened with UBS that has decided to scale down dramatically its investment banking operations to concentrate in private banking and wealth management.
The Economist notes how, in 2008 just after the financial crisis exploded, European Banks thought that it was their opportunity to catch up with their American counterparts. For example, Barclays took advantage of Lehman Brothers failure buying its investment bank activities, but in the end, American regulators invested massively in the recapitalization of their banking system whereas European banks are still coping with this issue. As a result, The Economist points out that without any doubt, “Wall Street is Back”.
This special report will be published in The Economist magazine on May 11th, 2013.
They lived among the dinosaurs. They live among us now. They’re the hardiest insects on the planet, able to survive up to 45 minutes without air and a month without food.Cockroaches. Cucarachas. Most people find them disgusting. Serious investors should find them enlightening.
After all, these hard-boiled insects didn’t endure hundreds of millions of years of volcanoes, shifting tectonics, meteoric explosions, Ice Ages and, for the past couple millennia, relentless attack from the human race without doing something right.
So here are the lessons they can teach even the savviest corporate acquirers and private equity investors:
1. Don’t die. As most anyone knows, killing a cockroach—if you can catch one before it scurries away—is difficult. Stomp on it, squish it however you can, and when you’re done, most of them will still be squirming. One source says they can live for up to 30 minutes without their heads. That’s one tough insect.
For investors, the lesson is to never acquire a business that will kill your chances of survival if the deal sours. While this may seem common sense, the record of successful mergers and acquisitions isn’t all that great, especially among mid-market companies with between $20 million and $100 million in revenue. Research shows the M&A success is about the same as a coin toss—about 50 percent.[1]
While large corporations have the resources to absorb the consequences of a bad deal, mid-market companies typically don’t. So mid-market transactions, where many corporate acquirers and private equity funds play, need to be wary and hedge against failure.
One way to do so is to never pay all cash. Structure acquisitions so they’re made in incremental steps over time via buyout rights, installments or “earn-outs” that use current cash flows to pay the sellers. This strategy provides room to maneuver (or scurry) should your due diligence not have uncovered some lethal rot in the company you’ve acquired.
2. Stay in the dark. Cockroaches hate light. Investors should, too. Unfortunately, many acquirers draw attention to their deals unnecessarily either through exercising their bragging rights, getting tied up in an auction or targeting companies that are already in the limelight, for better or worse.
The safest approach, like the cockroach, is to stay in the dark, “under the radar” as they say. This way, negotiations can continue unfettered before unmanageable political, regulatory, labor, tax or other issues arise that can slow or even stop a deal in its tracks. Part of any due diligence should be to measure a company’s relative “radioactivity” regarding any of these matters. Staying dark also minimizes the risk of competitive bidders coming forward, which can lead to an auction.
Auctions can be especially troublesome for two reasons. One is that the business press likes nothing better than reporting conflicts, and most auctions pit different suitors against each other. The other is that the purpose of auctions is to get sellers the highest prices possible, which means investors are encouraged to pay the most – sometimes more than the business is worth. Then, on top of that, the deal is already in the public eye and subject to increased scrutiny—a double whammy.
3. Eat whenever you can. Cockroaches, as noted, can go a month without food. Investors should be just as patient. But once the right deal is made, investors need to seek a return of their capital as soon as they can. The way to do this is to structure the deal as an installment acquisition or as a partnership or joint venture that means you, the buyer, participates in all future cash flows. In other words, the seller gets paid while you get paid.
Not only does this approach accelerate an investor’s return on capital, it also helps minimize risk. In part that’s because—if Lesson #1 was followed—the amount of up-front capital at risk was minimized. It’s also because paying sellers from their companies’ future cash flows aligns their interests in maximizing those cash flows with your interest in a return not just of your capital but a profit from it as well.
* * *
As Charles Darwin reportedly said in describing the essence of evolution’s survival-of-the-fittest concept: “It’s not the smartest or strongest creature that survives; it’s the one that responds best to change.” If investors keep these three lessons from the lowly cockroach in mind, they’ll usually find that they, too, will be able to respond to change, to hide from danger, and even better, to thrive and prosper.
[1]Why Half of All M&A Deals Fail, and What You Can Do About It, by Robert Sher. Forbes, March 19, 2012
As a headhunter with a special focus on the asset management industry, I have often found that the business head responsible for Iberia was also good enough for Latin America, even though the person was based in Spain, London, or other European financial centers. I believe that these managerial decisions do not fit with current market trends which are mainly based on strategies highly focused on partnership with business associated on location and third party distribution structures, totally directed towards the penetration and growth within the investment world of pension funds with a primary focus in Chile within the AFP segment, including Peru and Colombia.
However, today there is a better understanding among those in the business of funds sales that brings up the question of whether this is really the right strategy or if they are missing an important market share… The market has evolved and managers are obliged to do likewise in their business strategies. The past international managers’ agreements with local correspondents to meet their business relationships with major players in the buy side of the industry (AFPs, AFORES … first in Chile and then to a greater or lesser extent Peru and Colombia), are giving way the analysis of managing potential conflicts of interest in their representatives, the transfer of income and, most importantly, realize that today the buy side want your counterpart to be based locally. It has also opened the door to a market beyond pensions. And it is the distribution market through private banks, broker dealers, family offices… in countries with excellent growth strategies and professionalization of its industry, where the regulator increasingly allows greater international exposure … to this we can also add the recent granting of important management mandates in the region.
Chile pioneered AFPs industry – private fund managers – with a turnover of over US$150 billion, with figures that will further international investments, today and some other firms such as JP Morgan, Schroders double those of just five years ago. Colombia and Peru are both boiling with pension systems increasingly sophisticated and open to actively managed funds, private equity, thematic funds, structured notes … as well as insurers, trusts, etc. …. distribution networks and private banking ….. Family offices, whether of the single and multi types, with capabilities to execute above US$10 million tickets. A market like Mexico, with fresh air under a new government with a new industry which has already reached US$ 250 billion between mutual and pension funds and pondering whether or not to open to active management. Blackrock signed their first agreements of asset managers that receive attractive mandates from the Afores, in this case Banamex, while Sura Afore just announced the same with Pioneer, Investec, Morgan Stanley and Blackrock. Not to mention Brazil, a country with a high development in the international investment where large houses have wanted to make local acquisitions to take relevant market positioning.
No doubt Latin America has much to contribute. The market is fully alive and growing, where in order to take advantage of the opportunities you have, without a doubt, to be close to your client and potential business. Sooner or later location will be crucial for business expansion, but today firms are already entering the feasibility analysis phase and market positioning, and more importantly, firms are evaluating what is the opportunity cost of not being present. Some have already arrived, very few were pioneers, others are doing prospective trips, and there are still many who still are considering it … What I think it is very clear, Latin America is not Iberia ….
