Latin America’s rapidly changing regulatory environment is enabling greater institutional investment in private equity as asset class, both domestically and abroad.
The pension industry in Latin America has been a key source of allocations for global managers and fund sponsors over the years, and promises to grow in importance as the size of these privatized social security systems quickly expands.
After almost ten years of launching their offshore alternative programs, pension funds in Chile, Peru and Colombia are working together with regulators looking for ways to increase limits and, therefore, allocation to alternative investments.
Institutional Investors in these markets have committed capital to different strategies, including large buyout, fund of funds and secondaries. In some of the markets, private debt, real estate and mid-market PE funds have also been considered, showing a greater level of sophistication in their Private Equity programs.
Family Offices dominate the commitments to international private equity in Central America and Mexico.
Total capital raised for international PE in these regions is highly concentrated in Family Offices 100+ HNWI and family offices actively investing in Private Equity. Many of the families are based outside of the region, mainly in Texas, Florida, New York and Boston
Regulatory developments in Brazil and Mexico, which would open up a potential market worth in excess of $300 billion for international fund managers.