Barclays Plc, BlackRock Inc. and Deutsche Bank AG are vying to tap as much as $9.3 billion in Mexican regulated pension assets that are poised to invest in commodities following regulatory changes.
Mexican pension funds, the nation’s largest institutional investors with 1.57 trillion pesos ($123.5 billion) under management, are allowed from this year to invest as much as 10 percent of assets in commodities. The funds known as Afores, barred from such investments since the system was privatized in 1997, allocated most of their holdings to Mexican debt markets.
“We’ve seen globally a great deal of interest in this phase” when pension funds start to invest in commodities, Philippe J.J. Comer, head of commodity structuring for the Americas in Barclays, said in an interview from New York. Mexico’s pension assets are important for commodity asset managers because they’re “going to grow quite significantly.”
Afores may hire investment banks to manage funds, according to regulations published Dec. 7. Pension funds may invest from 5 percent to 10 percent of some of their portfolios in commodity-linked securities and use a larger percentage of assets to buy stocks, under the revised rules.
‘Most Eligible Bachelor’
Mexican pension funds have been wooed by firms such as Barclays, BlackRock and Schroders Plc to manage some of their assets, said Sergio Mendez, who manages 200 billion pesos as money manager at Afore XXI Banorte.
Spokesmen for Deutsche Bank and Schroders didn’t respond to requests for comments.
The entry of Mexican pension funds to commodities “make us the most eligible bachelor” for some investment banks, Xavier de Uriarte, chief executive officer at Mexico City-based pension fund Afore Sura, said in a Feb. 8 interview.
De Uriarte, who oversees 260 billion pesos in assets at Mexico’s third-biggest pension fund, said Afore Sura created a team to analyze business proposals from different investment banks to manage its commodities portfolio.
Mexico’s central bank is expected to publish at “any moment” a list of allowable commodities for investment, said Oscar Franco, head of a pension association known as Amafore.
“This is a milestone, a structural change for the Afores,” Franco said in a Feb. 13 interview. The higher caps and new investment options should help pension funds to diversify and boost returns, he said.
“Without a doubt, this is a competitive market” and BlackRock is working with the Afores to find the most appropriate solutions, Samantha Ricciardi, BlackRock’s director of business development for Mexico, said in an e-mailed statement. Commodity investments are one of several assets being discussed with Mexican pension funds, she said.
Assets managed by the 13 Mexican pension funds more than doubled in the past 5 years to 1.57 trillion pesos on Dec. 31 from 724 billion in 2006, according to data from the country’s pension regulator known as Consar.
Pension funds need to rely on outside firms because it’s almost “impossible to have the required specialized experience to manage every kind of available instruments linked to commodities,” De Uriarte said.
-- With assistance from Jonathan Roeder in Mexico City. Editors: Robin Saponar, Tina Davis