MAPFRE AM participates in the CAPCorp Congress together with the world’s largest private equity funds
MAPFRE AM–the MAPFRE Group’s asset management unit–participates in major industry events together with the largest venture capital funds, such as Carlyle and Tikehau Capital. Javier Lendines, general manager at MAPFRE AM, discussed his strategy on alternative assets as part of the opening roundtable discussion at the 21st edition of the CAPCorp Congress on private equity and mergers and acquisitions. Over 400 investment executives participated in this annual event, including Carlos Robles, a managing director at Carlyle; Carmen Alonso, head of the United Kingdom and Iberia at Tikehau Capital; and Alejo Vidal-Quadras, formerly of KKR and now a partner and head of Southern Europe at bd-capital.
MAPFRE AM decided just over a year ago, in June 2020, to launch its first venture capital fund on the market, which it did in collaboration with the manager Abante and investment advisory firm Altamar, with MAPFRE committing €250 million in equity. That fund, MAPFRE Private Equity FCR, pools the investments in private equity that all companies from the MAPFRE Group had already undertaken at that time, along with those they continue to make. Lendines believes that there are two key aspects that all investments in illiquid assets have in common. First, they require due diligence from the management firm: “You have to remember that you’re going to be joined with them for 10 years, with no easy way to withdraw your investment,” he said. The second aspect he emphasized is the need for a commitment to environmental, social, and governance (ESG) criteria, which is an area where the MAPFRE Group already shows a high level of dedication. “As part of the due diligence, another issue that arises is regarding the questions being asked about ESG at two levels: the manager’s own commitment, and whether it is applying those ESG criteria during its investment process,” he explained.
Lendines also offered some insights into his views on the current macroeconomic situation, where the old ghosts of inflation have reappeared, which in this expert’s opinion, is “threatening to slow down the economic recovery.” “Consumption capacity is not rising at the same pace as prices are, so in reality this represents a loss of real disposable income. Since this is having an effect especially on very inelastic goods (those that must be purchased no matter what), it is typical for growth to end up being hindered. However, we have to keep in mind that Europe and the USA have very different outlooks,” Lendines emphasized.
He also summarized some of MAPFRE’s main investment strategies for 2022. “At MAPFRE we manage investment portfolios in over 40 countries, where the macro and market situations are very diverse. The circumstances my colleague from São Paulo is facing are not the same as those existing in Istanbul, or those we are seeing in Europe,” he pointed out, before going on to describe the main points of the company’s strategy. “We’re bullish with respect to rates, so we are reducing our exposure primarily by shortening the duration of the portfolios,” he explained. As a second point to consider, he said that portfolio liquidity is increasing “to maintain the ability to invest if corrections to the markets occur, so we can leverage those opportunities.” With regard to investing in equities, “we are moderately optimistic about the upcoming quarters: there is liquidity, economies are showing growth, and the companies have been publishing positive guidance.” However, he also made it clear that “nobody is expecting the same kind of performance we have been seeing during 2021.” He concluded by saying that there will be an ongoing pursuit of yields and returns with reliance on assets that are less liquid, such as private debt and private equity.
In an environment characterized by low interest rates, MAPFRE, like other companies in its industry, has been diversifying its portfolio with these types of alternative assets, and it has been doing so in collaboration with the best possible partners in each segment. In real estate, alliances have been formed with Swiss Life and Macquarie, and with the latter in relation to infrastructure as well.