Director of Business Development at MAPFRE AM
MAPFRE has incorporated a new fund of infrastructure funds into its range of alternative assets, a product of its alliance with Abante and following an agreement with the giant Macquarie. In this interview with El Nuevo Lunes, Eduardo Ripollés, Institutional Sales Director at MAPFRE AM, explains the reasons that have led the insurance group’s asset manager to diversify into this type of asset. In his opinion, in addition to profitability—although reaching double-digits is complicated—”what they do provide is stability.”
The current low-interest-rate environment, which will last for a long time as a result of the crisis caused by the pandemic, has forced large investors (and insurance companies, in particular) to diversify their portfolios. “We believe that the excess liquidity in the market is being invested in everything that is infrastructure and in businesses that have long-term visibility. A lot of money from mutual funds is being invested in this sector as a natural substitute for sovereign debt.”
MAPFRE has much of its balance sheet invested in sovereign debt, especially in Spanish Treasury bonds. However, “for two or three years, we’ve needed to look for alternatives to fixed income before we had this situation involving negative interest rates. And from there, the possibilities began to open up a little.” “We began to see other possibilities in real assets and a plan was established (which is being implemented) to invest in real estate, private equity, infrastructure, renewable energy, as well as in alternatives that made sense and did not pose an excessive risk in terms of the portfolio balance sheet. So MAPFRE—which in theory is Spain’s largest institutional investor in the sector by default, as it is the largest insurance company and has a high cash position—needed to diversify,” adds Ripollés.
In developing their strategic alliance, MAPFRE and Abante have launched an infrastructure fund of at least 200 million euros, together with the Australian financial services group Macquarie. The insurer will provide an initial capital of 50 million and will invite other institutional investors and private banking clients to participate in the fund under a co-investment model.
MAPFRE Infraestructuras FCR, as the vehicle has been called, will facilitate access to the main investment strategies in global infrastructures in an efficient and diversified manner, thanks to Macquarie Infrastructure and Real Assets (MIRA). In total, Macquarie manages investments worth in excess of 126 billion euros worldwide and is the largest infrastructure manager globally. Specifically, the structure is a fund of funds that will invest in several already established and highly successful MIRA vehicles.
As Ripollés points out, the majority (of investors) will be Spanish because the fund, which has a target return of 7 percent throughout the investment, has been set up within the Spanish legal framework and is regulated by the Spanish National Securities and Exchange Commission (the “CNMV”). And, in the end, as long as you are a Spanish resident, you’ll have several tax breaks. “They are involved funds that continue to look for investors who are already investing in a series of assets that generate returns. That’s why, from the outset, they’ve started to generate returns on the basis of the assets they’ve already invested.” In addition, he states, “we have investors with the capacity to invest large amounts of money that have a commission structure. The good news is also that, for the first time, an infrastructure fund has been set up in Spain with a minimum investment amount of 100,000 euros for individuals. In other words, we are no longer talking about the typical fund in which the minimum investment was 1 or 1.5 million euros.”
To read the full interview (spanish version), click here