The early-stage venture capital fund Manutara Ventures is gearing up to run a program to help Latin American startups establish their presence in the U.S., and it has already completed a key step: selecting the companies that will participate in the initiative.
The firm, originally from Chile but with operations in Miami, announced in a statement that it chose 20 startups for a virtual preparation program aimed at eventually softlanding in Miami, expanding their operations to that market.
Out of the 90 startups that applied, Manutara selected 20, who will now enter an initial virtual workshop. Following this, the venture capital fund will select ten to participate in an elevator pitch event, during which a committee will choose the five winners who will attend the in-person softlanding in Miami. Additionally, they announced, one of these young firms will receive a $500,000 investment.
Of the startups now participating in the workshop, 13 are Chilean companies: Check WMS, Alseco, Dyegon, Forpay, Tufirmadigital, CamiónGO, BntHunter, Flujappi, Ambar Chile, StrikeOne, Ventipay, Wbuild, and Owl Team Solutions. There are also two Colombian firms, Menupp and Autoparti, along with the Mexican Getxerpa, the Argentine Delfi IA, the Brazilian Brota, and the Peruvian Kambia. Only one company in the program is from outside Latin America: Fydels, based in China.
The selection process and the management of the softlanding program are in the hands of Manutara Ventures, which has a startup portfolio valued at over $1 billion. Cambridge Innovation Center Softlanding (CIC Softlanding) is the entity assisting the internationalization process. The initiative also has the support of the Chilean state agency Corfo.
The Applications
“There was a significant increase in applications compared to last year, which makes us very happy, and, just like last year, there were interesting candidates with potential for investment at their current stage. But that will be seen and decided at the end of the program,” said Cristián Olea, Managing Partner of Manutara Ventures, in the press release.
Of the total 90 startups that applied, 37% are from Chile and 36% from other Latin American countries, while 18% declared themselves from European Union countries and the remaining 9% came from startups already based in the United States.
The applicants primarily belong to the B2B sector, but Manutara also reported an increase in applications from fintech and other companies that have AI as an important component in the development of their proposal.
“So far, the results have been positive. On the other hand, it can be seen that the entrepreneurial spirit never dies, and thanks to this call, we managed to identify a lot of startups that we didn’t have on our radar, which are still at stages a bit early for the fund we have open to investments, but that could be candidates for investment in the future,” Olea said.
According to a statement from the manager, this approval opens new opportunities for long-term investors in the Mexican retirement system, based on the “wide moat” model, an equity investment strategy focused on the comparative advantages of companies.
The concept of an “economic moat” was popularized by legendary American investors Warren Buffett and Charlie Munger, referring to the advantages of a company that make it more difficult for competitors to take away its market share.
Thus, VanEck’s ETF – which trades under the ticker MOAT – is indexed to the Morningstar Wide Moat Focus Index, focusing on quality companies trading at attractive valuations, according to the financial services firm of the same name.
To be included in this index, a company must have a “wide moat” rating, meaning Morningstar expects it to maintain its competitive advantages for at least 20 years. Additionally, they must be trading at an attractive price compared to the firm’s fair value estimates.
From the manager’s perspective, the approval from the Afores union is a significant milestone. “This approval underscores the quality and attractiveness of our investment solutions and reinforces our commitment to delivering innovative and valuable products to the Mexican market,” said Eduardo Escario, regional director of International Business Development at VanEck.
In line with this, the executive highlighted that the MOAT ETF is “ideal” for long-term investors as it targets companies with significant growth potential. “I look forward to meeting with investors in the second half of 2024 to discuss how this product fits into their long-term strategies,” he said.
Key Characteristics
VanEck emphasizes four key variables of the ETF, the pillars of the index-linked investment vehicle’s thesis:
First, they invest in companies with competitive advantages that are difficult for their competitors to replicate. These “economic moats” help companies remain profitable and sustain their market share in the long term.
Additionally, there are attractive valuations. The fund uses a rules-based methodology to identify and select companies trading at attractive valuation levels compared to their fair value estimates.
MOAT also aims for diversified exposure, with an index featuring equal weightings. This, noted the manager, offers diversified exposure to companies across various sectors, reducing the risk associated with investing in just one company or industry.
Finally, VanEck highlights the long-term growth potential of the strategy. By focusing on companies with durable advantages and attractive valuations, the goal is to surpass the growth potential of traditional broad indices.
Preparations are underway for the upcoming 0100 Conference Mediterranean, which will be held in Milan from October 28 to 30. This event for European and global private equity and venture capital investors is a unique opportunity to connect with over 400 limited partners (LPs) and general partners (GPs) from leading industry firms such as 500 Global, AltamarCAM, Astorg, Ardian, Balderton, Banco BPM Vita, Golding Capital Partners, Dawn Capital, EIF, H.I.G. Capital, Iris Capital, LocalGlobe, Lunelli Holding, Merseyside Pension Fund, Morgan Stanley, National Bank of Greece, Octopus Ventures, Paladin Capital Group, Tikehau Capital, Unigestion, VenCap, among others.
With a comprehensive agenda, attendees will enjoy activities over three days at iconic locations such as Palazzo Mezzanotte, Palazzo Reale, Palazzo Giureconsulti, Cracco in Galleria, and others. Additionally, there will be numerous networking opportunities, including the opening night, VC cocktail reception, and PE networking dinner to foster impactful connections.
During the sessions, participants will have the chance to connect with over 100 leading fund leaders from across Europe and beyond, with a special emphasis on the Southern European region. According to the organizers, the event is intentionally designed on a small scale to ensure audience control. “Typically, 80% of our attendees are decision-makers such as partners, VPs, and directors,” they assure. You can check the list of attendees to date at this link.
Another attractive feature of this event is the targeted audience, with 30% of investors focusing on private equity, 44% on venture capital, and 26% on both asset classes. “With an audience comprising 30% LPs and 45% GPs, you are sure to connect with the right people,” the organizers highlight.
Register to participate in the event and access tickets for the conference with a 15% exclusive discount for Funds Society readers using the code FS15, by clicking here.
Franklin Templeton has selected Aladdin, BlackRock’s investment management technology platform, to unify its investment management technology.
The decision is part of Franklin Templeton’s strategy to enhance the efficiency and scalability of its investment management business. Aladdin will provide Franklin Templeton with a unified platform to manage its assets and risks, according to the firm’s statement.
With over 30 years of experience in developing investment management technology, Aladdin is a market leader and offers a wide range of tools and functionalities to support investment decision-making, the statement adds.
The platform also offers a wide range of analytics and reporting features, which will enable Franklin Templeton to improve its ability to monitor and evaluate the performance of its investments.
Franklin Templeton’s selection of Aladdin is an important step toward innovation and growth in the investment management market. The unified platform will allow the company to enhance its operational efficiency, reduce costs, and improve the customer experience.
Franklin Templeton is one of the investment management companies with assets under management exceeding $1.6 trillion.
KKR and The Penn Mutual Life Insurance Company announced the signing of a definitive agreement under which investment funds managed by KKR will acquire Janney Montgomery Scott LLC.
Founded in 1832, Janney is a wealth management, investment banking, and asset management firm. It has over $150 billion in AUMs, with more than 900 financial advisors providing financial planning, asset allocation, retirement planning, and other financial services and advice to clients in 135 offices across the U.S.
After the transaction closes, Janney will become an independent private company that will continue to operate autonomously.
“We are excited to enter this next chapter in our nearly 200-year history with a new value-added strategic partner. KKR has demonstrated that they value our client- and advisor-centric culture and share our strong belief in the tremendous opportunities ahead for our business,” said Tony Miller, president of Janney.
Additionally, Chris Harrington, a partner at KKR, commented that Janney’s brand and culture were fundamental to the agreement’s closure.
“Janney’s respected brand, client-centric culture, and strong growth track record have established it as a first-class business that we believe is well-positioned to benefit from the significant tailwinds driving demand in the U.S. wealth management market,” said Harrington.
KKR will support Janney in creating a broad equity ownership program to provide the firm’s 2,300 employees the opportunity to participate in the benefits of ownership after the transaction closes.
This strategy is based on the belief that team member participation through ownership is a key driver in building stronger companies. Since 2011, more than 50 KKR portfolio companies have awarded billions of dollars in total equity value to over 100,000 non-management employees, according to the text published by the firm.
The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in the fourth quarter of 2024. KKR is making its investment in Janney primarily through its North America Fund XIII.
Ardea Partners acted as financial advisor, and Kirkland & Ellis LLP and Simpson Thacher & Bartlett LLP acted as legal advisors to KKR. WilmerHale acted as legal advisor to Penn Mutual.
The hedge fund Citadel has finally presented a real estate project for its property at 1201 Brickell Bay Drive.
Representatives of the $51 billion fund submitted a real estate project to the Miami-Dade County office, which includes a tower designated for office space, a hotel, and shopping, along with a health center and a gym, as reported by the local press.
Neisen Kasdin, co-managing partner at the law firm Akerman in Miami, filed the application on Friday to meet with county officials and discuss the approval process for developments within a rapid transit zone. This regulation, managed by the county, allows for higher density and reduced parking requirements for projects near transit stops, according to Bisnow.
The firm moved its headquarters from Chicago in 2022 after its founder, Ken Griffin, relocated to South Florida.
Citadel spent a then-record $363 million in April 2022 to acquire the more than 10,000-square-meter waterfront site in Miami’s financial district. The hedge fund purchased the property through a Chicago-based entity.
“I am excited to have recently moved to Miami with my family and look forward to rapidly expanding Citadel in such a diverse and vibrant city,” Griffin wrote to employees in 2022, announcing the move in a note reported by the international agency Reuters.
The firm employs around 4,000 people in 17 offices worldwide, with 1,000 working at its Illinois headquarters.
Citadel executives have expressed concerns about crime in Chicago, Reuters reported.
The office tower at 830 Brickell Avenue has secured a $565 million mortgage ahead of its delivery, announced its developers OKO Group and Cain International, according to local press.
The firms obtained the long-term loan from Tyko Capital for the tower located in Miami’s financial district.
The permanent financing replaces a $357 million loan from MSD Partners, the investment fund backed by Michael Dell. The loan was originated for $300 million in 2019 and was increased to its final balance last July.
“830 Brickell is the first office building to be constructed in the area in over 10 years and brings a premium commercial offering to the heart of Miami’s financial district. A truly unique addition to Miami’s skyline, this iconic tower offers unparalleled accommodation to the world’s leading companies,” says the project description on its website.
The nearly 60,000 square meter tower, initially scheduled for delivery in 2022, became the city’s first trophy office tower in a decade and has been fully leased for over a year, reported local outlet Bisnow. They explain that Tyko is a joint venture between Surya Capital Partners CEO Adi Chugh and the hedge fund Elliott Investment Management, which relocated its headquarters to West Palm Beach in 2020.
The 57-story building began construction in 2020 and became a magnet during the pandemic for high-profile companies relocating from other states or opening branches in South Florida.
More than 90% of its tenants will open their first office in Miami, according to a statement, Bisnow adds.
In addition to Citadel, which recently subleased two floors to expand to eight floors, Microsoft signed a lease for 15,240 square meters in the tower in September 2021, nearly a year before Citadel announced it would relocate its headquarters from Chicago to Miami.
Santander Private Banking offices will also be installed, along with law firms such as Kirkland & Ellis, which occupied six floors before subleasing two to Citadel, and Winston & Strawn, which leased 35,000 square meters.
The venture capital firm Thoma Bravo, insurance brokerage Marsh, wealth management firm CI Financial, and New York financial firm A-Cap also have space in the tower.
J.P. Morgan Asset Management has hired Josh Myerberg as Head of Real Estate Portfolio Strategy for the U.S.
In his new role, Myerberg will lead the company’s real estate investment strategy in the region.
With over 20 years of experience in the real estate investment industry, Myerberg joins J.P. Morgan from Morgan Stanley, where he held the position of CIO and Deputy Portfolio Manager of the firm’s largest real estate fund, according to the company’s statement. In his new role, he will lead portfolio strategy, oversee the core and core plus real estate teams, and manage the Strategic Property, Special Situation Property, and U.S. Real Estate Income & Growth strategies.
“Josh’s track record, two decades of experience, and strategic vision will be crucial for driving the growth and positioning of our equity funds. The real estate franchise is extremely well-positioned for growth,” said Mr. Tredway. “We are experiencing significant momentum in our U.S. business, and this new role will further consolidate our industry leadership,” commented Chad Tredway, Head of Real Estate Americas, to whom Myerberg will report directly.
Myerberg’s career began in the Real Estate Investment Banking group at Bank of America Securities and at First Union Securities. He is an active member of ULI, serves as Chairman and is a member of the NAREIM Board, and is a member of the Real Estate Round Table.
Markets are increasingly attentive to the economic proposals of the Republican candidate for the U.S. presidency, Donald Trump, and their implications not only for the country but also for the global economy. Barclays Bank presents an analysis to evaluate what it calls Trumponomics, referring to the economy under a possible Trump presidency.
Higher tariffs, reductions in corporate taxes, restrictions on migration to the United States, and more protectionism are some of the bases of the economic program proposed by Trump.
Often, their immediate effect could be partially offset by countermeasures (e.g., retaliatory tariffs), exchange rate adjustments, and substitution effects, which in turn depend on supply and demand elasticities, not known beforehand.
However, the firm indicates that it seems fair to say that a combination of higher trade tariffs and reduced migration are, in principle, negative supply shocks with inflationary consequences. At the same time, lower taxes without equivalent spending cuts would primarily stimulate demand (though potentially with some positive supply effects as well).
This would point to a U.S. economy with strong (real) growth but also greater inflationary pressures. This means: a rapid expansion of nominal GDP, with higher nominal interest rates and a strong U.S. dollar as an exchange currency.
Deregulation could offset inflationary pressures to the extent that it translates into a positive supply shock and increased productivity, although such effects traditionally take time, Barclays noted.
The financial firm provided a summary of the key policy proposals that have emerged so far and some of their macroeconomic implications:
Higher Tariffs
Trump has been vocal about his perception of unfair global trade, particularly focusing on countries with which the United States has large bilateral trade deficits (such as China and the European Union). He and his team, centered around former U.S. Trade Representative Robert Lighthizer, have suggested implementing a 10% tariff on all imports to the United States and a 60% tariff on Chinese imports. If implemented, this would raise the average U.S. tariff to the highest level since the 1950s, marking a significant departure from the post-World War II global trade regime.
Lower Taxes
Trump described his economic doctrine as “low interest rates and low taxes.” Therefore, it is very likely that a Trump administration would extend its 2017 tax cuts. He has also pledged to further reduce the corporate income tax cost from 21% to 20%, and in an interview with Bloomberg, he floated the idea of lowering it to 15%, although he admitted that “this would be difficult.”
Less Migration
Trump has promised to reduce immigration, which reached a record level in 2023. Immigration flows have been a key source of American exceptionalism during the post-pandemic period, providing a strong tailwind for aggregate supply that has helped sustain disinflation amid solid consumption-driven expansion. Policies to curb the flow of asylum seekers would reduce labor supply and growth.
Less Regulation
The Trump administration would likely take a significantly different approach from the Democrats, particularly regarding energy and the environment. The effects of this could be complex. For example, expanding oil production could be a positive supply shock, but slower adoption of electric vehicles would increase oil demand. In any case, a limited effect on oil market fundamentals is expected in the short term. Similarly, reducing bureaucracy could facilitate business operations, but repealing some laws could affect investment and employment.
Realigned Geopolitics
There are potentially significant changes from current policies that markets cannot ignore. First, Trump and JD Vance (vice presidential candidate) openly talk about ending the war in Ukraine by withdrawing support for Ukraine and thus forcing an agreement with Russia. Secondly, they maintain their anti-China views, but Trump has raised doubts about the U.S. commitment to defend Taiwan. Thirdly, in the Middle East, Trump would likely refocus on strong relations with Saudi Arabia.
A general theme that seems certain is that under Trump’s presidency, the United States would expect its allies, whether Europe or Taiwan, to “pay” or rely less on the protection provided by the United States.
The eventual return of the businessman and reality TV star to the U.S. presidency, which seems increasingly likely, would bid farewell to Bidenomics, the costly experiment of industrial subsidies and protectionism, said Barclays, but Trumponomics would arrive, with effects and consequences still unknown for the United States and the entire world.
This year, the Chilean market received the long-awaited news that the Central Bank has finally decided to raise the investment limits for Chilean pension fund managers (AFPs) investing in alternative assets. This decision is in line with the global trend of sustained growth and interest in this asset type, being an important contributor to both diversification and positive returns for fund managers worldwide, whether they are state entities, pension funds or private managers.
Given its variety of sub-assets and sectors, its relatively short existence compared to liquid assets, and its rapid growth and evolution, the growth of the alternative assets fund industry undoubtedly presents numerous difficulties, challenges and opportunities for all its stakeholders: managers, investors, companies, regulators, legal advisors, consultants, etc. One example is the range of topics we see discussed at various levels on a daily basis: valuation, reporting, liquidity, sustainability and ESG, secondary markets, government participation, distribution and democratization, to name a few.
US as key influence to date
However, in this article we want to focus on a longer-standing question, which cuts across this entire booming industry, both in Chile and the rest of Latin America, and relates to the ideological inspiration behind it. To put it simply: where should we look for references, solutions and innovations?
Readers will no doubt agree that the initial reflex response is: to the north, particularly to the US. Perhaps it is enough to look at Chile’s vigorous venture capital industry, with its recent explosion and growth, which seems to be the clearest example of this Anglo-Saxon inclination. Cliff, Vesting, Reverse Vesting, Safe, Convertible Notes, Preferred Shares, Pre-Money, Post-Money, Seeds, Flip and many others, are all terms that have made their way into our business and legal world. From California and Delaware, straight into our contracts and the structuring of our companies, passing through the not inconsiderable obstacles of our legal system, our language and – even – the scrutiny of our public bodies.
These regions have so far dictated, and in a very decisive way, the development of this industry. Is there anything wrong with that? Not at all. Chile and Latin America have merely looked where the whole world looks: where the investors, transaction volume, knowhow, specialists and latest trends are, and where (until now) legal and institutional certainty have been.
Today’s circumstances prompt fresh scrutiny
However, it is healthy for any industry, especially one that has been developing for several years and has reached a certain level of maturity, as the alternative assets industry has, to have certain moments of introspection. Raising capital and investing (or advising or overseeing) are not the same today as they were ten, five or even two years ago.
In addition to the back and forth of macroeconomic cycles, there is an ever-growing list of global factors to consider. To highlight just a few, these include:
political and geopolitical risks (both totally contained until very recently but now constantly changing and unpredictable);
socio-economic evolutions (or regressions);
the digital revolution and artificial intelligence in their wide-ranging (and even incommensurable) manifestations;
the diverse economic and social after-effects of the pandemic;
citizen empowerment;
accountability and criticism of public institutions; and
various industry sector and regulatory trends in different fields.
In short, there is today a level of uncertainty and fragility that western economies have not experienced for several decades and that we probably believed had been consigned to history and the previous century.
For all these reasons, it is absolutely essential for a mature industry to constantly ask itself where it can find the material and intellectual resources to continue growing in a sustained manner.
Latin America’s close cultural and legal links with continental Europe
A truism to make the point: Latin America is a heterogeneous region, a mix of different influences and cultures, which is impossible to reduce to just a handful of common characteristics to indicate that we are or are not a certain way. However, it is equally evident that there are at least two elements that are largely present throughout the continent and that are by no means negligible.
First, language and market “culture”. Whether it is Spanish or Portuguese, English is clearly not the predominant language, indeed it is sometimes less widely spoken than it should be and than we would like in professional contexts. Also, markets like ours are usually more accustomed to developing sustainable businesses over time, rather than US exponential-growth type companies. Second, the legal system: with a few exceptions, Latin America adopts a continental Europe style (civil law) legal system and not the common law.
Given that we mostly share our cultural and legal base with continental Europe, it seems paradoxical that we do not give it enough weight when seeking institutions, concepts, models and useful references for Latin American legal, economic and business realities.
Luxembourg as an example
Without going into detail, it has been a pleasant surprise to observe, for example, that Luxembourg, the largest investment fund center in the world after the US, bases its very diverse investment vehicles on exactly the same legal and economic institutions as our own region. Corporations, limited liability companies and limited partnerships (sociedades en comandita) are cornerstones of a jurisdiction where pension funds, severance funds, insurance companies, banks, other institutional investors, sovereign wealth funds, mutual fund and alternative fund managers, family offices and HNWI from all over the world come together to invest, in turn, in the most diverse parts of the planet.
Indeed, a substantial part of the Luxembourg investment fund industry is based on commercial laws, codes, administrative practice and – perhaps most importantly – economic-legal principles essentially similar to those of Chile and the rest of Latin America. UCITS, UCI II, SIFs, SICARs, RAIF, SPF, etc., may sound like utterly foreign and complex concepts, but they are nothing more than the regulatory wrapping beneath which lie the same companies that we have in each of our countries.
Leveraging European expertise for Latin American growth
For these reasons, and this is valid for the investment funds and alternative assets industry and also for our overall legal and economic reality, the problems to be solved and the possible solutions to be explored from a European perspective will often coincide with those of our region. Likewise, it is not unreasonable to argue that it should be possible to “import” these solutions in a much easier, more fluid and natural way than those brought from the Anglo world.
Further, in matters where Europe diverges from Latin America, Europe should still be seen as an important source of knowhow. In our opinion, these matters are mainly due to the communitarian character of the EU economy and the powerful impulse provided by the aggregation and direction of budgetary, monetary, human and intellectual resources that – so considered – make up the second largest world economy and have generated a regulatory vanguard in practically all the issues that are of interest to Latin America.
EU knowhow on topical regulatory issues for the alternative assets industry
Thus, ESG, data protection, cybersecurity, AML, corporate governance, public-private collaboration, Fintech, “passporting” of services and promotion of private equity and venture capital, are all topics that affect the alternative assets industry in various ways. For these topics and many more, there are EU Regulations, Directives, soft law, Guidelines, recommendations and – even more relevant – several years of implementation and development.
Practical lessons for Latin America
In particular, so much could easily be learned from the other side of the Atlantic regarding, for example:
fund structuring (co-investments, parallel vehicles, feeders, masters, continuation funds, warehousing);
relationships with investors (institutional, HNWI, retails);
distribution, redemptions, liquidity and incentives for managers (carry);
governance of the various vehicles (boards and intermediate committees);
relationships with regulators and state agencies (impossible not to think of the CORFO programs in Chile and how the European Investment Fund, the European Investment Bank and the various national agencies do it);
relationships with investee companies (transactions and financing at different levels and in different jurisdictions);
distribution/marketing, investment and outreach at regional and global levels;
impact funds;
sustainability; and
reporting.
Time to look more into Europe
In conclusion, if we add the last component (technical, regulatory and practical vanguard) to our first point (legal and cultural proximity), then looking more closely at Europe seems practically an imperative, rather than merely a suggestion. Is everything that is done and legislated in Europe good and a model to follow? Of course not, but even in matters that have not been handled in the best way there, the opportunity to “learn from trial and error” is available. The resources are there, we just have to take the time to use them.
