MAPFRE teams with Abante and Altamar to launch new ‘evergreen’ co-investments PE fund of funds vehicle
Spanish insurance group MAPFRE has taken a significant step forward in its growing commitment to alternative investments with the launch of a private equity fund of funds that is open to co-investments from other institutions.
MAPRE AM, the group’s asset management arm, has teamed up with Abante Asesores – the financial advisory firm in which the insurer acquired a 10 per cent stake in September 2019 – and long-established private markets fund of funds group Altamar Capital Partners for the new launch.
The insurance group is committing equity totalling EUR250 million to the new MAPRE Private Equity FCR fund of funds, which is registered with the Spanish market regulator CNMV. The fund will be managed by Abante Asesores Gestión SGIIC, while Altamar Private Equity SGIIC will act as the investment advisor.
MAPFRE said the new investment vehicle will bring together the existing private equity investments of all the companies in the group, as well as those made going forward – and that it will apply a “very conservative” strategy, in line with the group’s investment policy.
Officials said the portfolio will be balanced in terms of risk and return, and will cover a variety of investment periods, company sizes and geographical regions, although investments 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,” explains José Luis Jiménez, Group Chief Investment Officer at MAPFRE. “In addition, the market moment is very attractive because great opportunities can be generated in the coming months.”
The newly launched fund has been structured as an evergreen vehicle – a type of fund that meets the needs of 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 such, it offers other investors the chance to participate via 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.
In taking this latest step, MAPFRE said it was 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.
As part of this strategy, the group’s board of directors authorised a further EUR500 million allocation to alternative investments almost a year ago, in addition to the EUR550 million already approved. However, the firm said this still represents a small percentage of the total EUR59.27 billion of assets managed by the group as at the end of March.