WAMEX holds final close on $160m

The Mexico City firm raised $120m through Mexico’s public pension system, which can only invest in private equity through public vehicles known as certificados de capital de desarollos.

WAMEX Private Equity has beat its $150 million target to close its second fund on $160 million, the firm announced in a statement. 

The close included roughly $120 million that was raised through certificados de capital de desarollos (CKDs) – public vehicles that allow Mexico’s public pensions to invest in private equity.

The Mexico City-based firm marketed the 2009 vintage for several years before closing. The lengthy fundraising period was due in part to local institutional investors’ relative inexperience in the asset class. Mexico’s public pensions, known as Afores, are prohibited from investing directly in private equity funds. Instead, they commit to CKDs, which are constructed by general partners as listed vehicles. 

The CKD structure wasn’t developed until 2009, which allowed the Afores to get some of their earliest exposure to private equity through WAMEX’s fund, partner Christian Warnholtz told Private Equity International.

“It was an uphill battle in regards to educating the market,” he said. “[The Afores] did not know about the asset class, how it worked, or how it functions. By the time we were done doing that, we had placed a CKD … and right now, I can tell you that the appetite is quite strong.”

In addition to tapping into the Afores’ capital pool, WAMEX raised an additional $40 million from European family offices and institutional investors as well as Mexican insurance companies and high net-worth individuals. The $40 million was raised through a traditional fund structure that will co-invest alongside the $120 million raised through the CKDs. 

WAMEX has already invested 40 percent of the fund’s capital in three portfolio companies, the firm said in the statement. This includes investments in Hoteles CityExpress, healthcare IT company HDS and sustainable solutions financing firm Water Capital.

Since 2009, private equity funds have raised at least $372 million from Afores as of January 2011. Infrastructure funds have also used the CKD structure. 

The Mexican government eased regulations surrounding the CKDs in July. Under new guidelines, approved by the Mexico’s Ministry of Finance and Credit, Afores’ commitments to CKDs must be 20 percent pre-funded. The remaining 80 percent of a commitment can be met through capital calls. Before, Afores had to provide their commitments in full up front. 

The development was accompanied by a second change that allows individual Afores to commit more than 35 percent of an individual fund. If a private equity firm engages outside capital, either in the form of a CCD or another private vehicle, a single pension can now commit up to 80 percent of a fund’s overall target. 

WAMEX was founded in 2002. The firm’s executive committee is comprised of Warnholtz, Ernesto Warnholtz, José Contreras, Sergio del Valle and Luis Carrera.