• It is creating a fund of funds with Abante and Altamar to bring together the investments of all of the Group’s companies in this sector
• It will apply a conservative strategy in line with MAPFRE’s investment policy
• It opens up the possibility for more institutional investors to participate thanks to a co-investment model
MAPFRE has decided to take an important step in alternative investment, specifically in private equity. Together with Abante and Altamar, it has launched a fund of funds in which the insurance group is committing equity totaling 250 million euros. This is the first instrument that MAPFRE has launched with Abante since they signed an alliance in September 2019, with MAPFRE taking a 10-percent stake in the financial advisory firm. The fund will be managed by Abante Asesores Gestión SGIIC, and Altamar Private Equity SGIIC will act as the investment advisor.
MAPFRE Private Equity FCR, which has already been registered with the Spanish National Securities and Exchange Commission (the “CNMV”), will bring together the existing private equity investments of all the companies in the Group, as well as those made going forward, and will apply a very conservative strategy, in line with MAPFRE’s investment policy. In particular, the portfolio created will be balanced in terms of risk and return, and will cover various investment periods, company sizes and geographical regions, though will be concentrated in the US and European markets. “These alternative investments allow us to diversify our balance sheet in a climate of low interest rates, and also tend to be less sensitive to market developments, which provides protection against sharp declines such as those we have seen recently. In addition, the market moment is very attractive because great opportunities can be generated in the coming months “, explains José Luis Jiménez, Group Chief Investment Officer at MAPFRE.
It is an evergreen vehicle — a type of fund that meets the needs of the insurers as well as other institutional investors, as the nature of their business activities means that they have to invest in very long-term assets. As a result, it offers other investors the chance to participate thanks to a co-investment model. In contrast with traditional private equity funds, which have an average lifespan of around 10–12 years, this instrument has an unlimited term.
By taking this step, MAPFRE is continuing its strategy of diversifying its portfolio to include other types of financial assets and gradually increasing its alternative investments in a bid to protect profitability against the prevailing climate of low interest rates. In the same vein, the Board of Directors authorized another 500 million euros in alternative investments almost a year ago, in addition to the 550 million already approved. However, it represents a small percentage of the assets managed by the Group, which totaled 59.27 billion euros at the close of the quarter.