LONDON, Nov. 29, 2023 (GLOBE NEWSWIRE) -- Today Preqin, the global leader in alternative assets data, tools, and insights, published its Preqin Territory Guide: Private Capital in Mexico 2023 report. The report lifts the lid on the state of Mexico’s alternative assets landscape. It reveals almost consistent year-on-year growth of assets under management (AUM) and dry powder in private capital asset classes* over the last 11 years, from the end of December 2011 to December end 2022. For example, private equity AUM – a combination of unrealized value and dry powder – increased six times from $1bn to $6bn, in the timescale stated above.
A region showcasing steady growth in alternative assets
At the end of Q2 2023, total allocation of alternatives in the Latin America (LatAm) region stands at $131bn, increasing by over 30% from $100bn at the end of 2020. Mexico and Brazil, LatAm’s two biggest economies, boast the largest concentration of alternative assets at a combined $57.3bn, according to Preqin’s Fund Raising from Latin America: A Guide to Raising Capital report from June 2023. While Mexico is currently the junior party to Brazil, it has shown greater momentum. Mexico’s AUM growth at an annual five-year rate was 37.7% up to the end of 2020, compared to Brazil’s rate of just 1.8%, over the same period.
In Mexico, venture capital (VC) AUM (the combination of unrealised value and dry powder as managed for investors) fell in 2022 as a whole. It totaled $1bn for the year, compared to $1.7bn in 2021. That said, this fall aligns with the wider downward trend in VC AUM by country seen globally. While Mexico is relatively small compared to other LatAm countries** when it comes to alternative assets AUM and dry powder, there are strong foundations being set. This is not only through capital injections and investment, but through regulatory change and key business-inducing initiatives (see below).
Key growth drivers: private equity and infrastructure
Private equity AUM in Mexico reached $6bn by the end of 2022, compared to $4.2bn by the end of 2021. But it is infrastructure investment that is a key growth area in Mexico. Infrastructure AUM in Mexico reached $8.2bn by the end of 2022, compared to $5.2bn by the end of 2021. Mexico's economy is maturing as it realizes the potential of connecting private asset investment to national growth – in which private equity and infrastructure are key.
In addition, the opening up of Mexican pension capital to alternative assets investment through AFOREs (authorized pension fund managers) – and importantly to national projects for economic development – has shown institutional investors globally that the economy is maturing. From a global perspective, Mexican financial regulatory changes in 2018 allowed international private equity firms to access Mexican pension funds. Since, BlackRock, Apollo, Blackstone and KKR have closed Investment Trust Certificates (CERPIs), securities listed on the Mexican Stock Exchange. This has aided the flow of Mexican pension capital into a range of projects across real estate, infrastructure and private equity.
David Dawkins, lead author of the report, at Preqin says, “Mexico is continuing to evolve as a regional hub for alternatives with its own pockets of value, local expertise and opportunity. A growing number of Mexican policymakers clearly see the benefits for public money and economic growth by investing in alternatives – in particular national projects and infrastructure. As consistent growth in AUM and dry powder across almost all private asset classes continues, more investors will be considering the country as a key regional hub.”
Additional key findings from Preqin’s Private Capital in Mexico 2023 report include:
- Venture capital: Mexico is growing faster than other Latin American countries in this asset class, with the number of start-ups rising by 16% annually between 2010 and 2019, according to PwC. Mexico is second to Brazil. The rise of Mexican unicorns, such as KAVAK, Clip and BITSO that were collectively valued at $12bn in 2021 has created a community of VCs in the country that continues to grow.
- Resilient Mexican economic growth: Mexico had a real GDP growth rate of 1.8% in April 2023, according to the IMF, despite facing economic headwinds blowing in from abroad. For comparison, real GDP in the US was 1.6% in the same period – an economy considered to be outperforming others amid global turmoil.
For more information, and to receive a copy of the report, contact Ollie Keyser at oliver.keyser@preqin.com
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Notes to editors
* Private capital excludes hedge funds
** LatAm includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru and Uruguay
Data collection
At time of publication, the figures in the report are for CKDs and CERPIs specifically, and do not include private funds. This data is a starting point for Preqin research in the region that will mature year-on-year.
For more information on our methodology, please see page 11 https://docs.preqin.com/pro/Private-Capital-Performance-Guide.pdf
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About Preqin
Preqin, the Home of Alternatives™, empowers financial professionals who invest in or allocate to alternatives with essential data and insight to make confident decisions. It supports them throughout the entire investment lifecycle with critical information and leading analytics solutions. The company has pioneered rigorous methods of collecting private data for almost 20 years, enabling more than 200,000 professionals globally to streamline how they raise capital, source deals and investments, understand performance, and stay informed. For more information visit www.preqin.com.
