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Private Equity Investors in the Americas - April 2014

by Alexander Nikas

  • 16 Apr 2014
  • PE

The region of the Americas—including the countries of South America, Central America, and the Caribbean—have shown increased levels of economic growth and job creation over the last decade. Certain countries like Brazil and Mexico are projected to lead the way in terms of economic growth in this region of the world in 2014. Furthermore, many institutional investors from the Americas continue to invest in private equity funds focused both in the Americas and globally—a good indication of a continually improving economy. 

Preqin’s Investor Intelligence tracks around 96 institutional investors from the Americas that are either currently active or considering investing in the private equity asset class. Collectively, these LPs have over $2.2tn in assets under management. Investors in the Americas, excluding fund of funds managers, are on average below their target allocation to private equity of 7.9% of total assets, with a current average allocation of 5.4%. In order to reach their target allocations to private equity, it is likely that investors in the Americas will continue to make new commitments to private equity. 

In fact, recent data collected by analysts at Preqin indicates that there are a number of institutional investors in the Americas that are looking to make new private equity commitments in the next 12 months. Included in the list of investors looking to commit new capital is one of the larger private sector pension funds in Chile, AFP Habitat. This $44bn private pension plan will commit $80mn to two private equity funds in the next 12 months. Brazilian National Development Bank will also be actively investing in the next 12 months. The large government agency, whose main goal is to be the premier financing agent for economic development in Brazil, is looking to commit between $150-200mn to new private equity funds in the next 12 months. 

Unsurprisingly, Brazil accounts for the majority of LPs based in the Americas that are either investing or considering investing in the private equity asset class. Preqin tracks 49 institutional investors based in Brazil, accounting for 51% of all institutional investors in the Americas. The largest investor in private equity in Brazil is the private sector pension plan PETROS with nearly $2.6bn allocated to private equity. The country with the second most LP investors is Mexico, comprising 14% of institutional investors in the Americas. Chile takes third place, making up 11% of investors in the Americas. Although this country has fewer institutional investors then Mexico, it is home to some of the top private equity investors in the Americas, including private pension plan AFP Provida whose current allocation to the private equity asset class stands at $1.9bn. 

Conversations with investors in this area of the world reveal that these LPs have a preference for venture capital funds.  In fact, nearly 51% of investors in the Americas have a preference for this type of fund. Buyout funds are the second most common fund type for these investors, with 42% of investors in the Americas investing in or considering these private equity vehicles. Fund of funds are also widely common among investors in the Americas with nearly 23% of all LPs showing an interest in these funds. 

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