Latin American pension funds will want more private equity exposure as falling interest rates force them to consider alternative forms of investments to meet their trustees’ needs, according to players in the region.
“The number one enemy of private equity in Brazil particularly was the high fixed-income rate. Eighteen months ago, when we talked to the pension funds in Brazil, they said they were making 25% a year by purely lending to the government, so why should they invest in private equity for an expected return of 30% with all the extra risks,” says Alexandre Saigh, a partner and head of private equity at Pátria Investimentos.
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