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Felipe Vilá Managing Director, Fondo de Fondos

MEXICO - Finance

Felipe Vilá

Managing Director, Fondo de Fondos

Bio

Since 2009, Felipe Vilá has led Fondo de Fondos, an investment vehicle created by four public development banks: NAFIN, FOCIR, BANCOMEXT, and BANOBRAS. Previously, Vilá served as CEO of HSBC Casa de Bolsa in Mexico. He holds a PhD in economics from the University of Texas at Austin (US).

"The investment vehicle that we will launch is a debt fund strictly related to the debt capital market."
A leading Mexican private equity fund of funds and co-investment alternative investment management firm, Fondo de Fondos sees opportunities aplenty in the country and Latin America as a whole.
Why did Fondo de Fondos decide to enter the venture capital industry?

We have launched new initiatives over the last year, and our venture capital part has grown considerably. We are in every new unicorn that has emerged, which I am pleased with. We operated in energy a little but decided to pause for obvious reasons, such as the drop in petrol prices. Following global tendencies, we launched a fund for impact investing and made the first close at the end of 2021. We will invest not only in funds that look for a market return but also in companies that want to make a social, ecological, and governance impact. They should not only comply with ESG criteria, but also value climate and social risks. They need to look actively for a positive impact.

How attractive is Latin America as a hub for investment?

Our interest area for investment lies in Latin America. We have a steady pipeline because there are funds in places such as Colombia, Brazil, Peru, and Mexico, which are pursuing adequate returns as well as taking care of social and environmental issues. We become signatories with some Mexican retirement funds administrators (AFOREs) for the UN for Responsible Investment program. We have also seen opportunities to create an investment vehicle to finance Mexican SMEs with the same positive impact in social and environmental purposes. There is significant interest from Mexican and foreign investors in technological innovation companies, and bigger funds that were never seen in Mexico before are entering the market. They are constantly looking for investment opportunities in Mexican technological companies, and this development has changed our company.

Why is it important to widen the scope of financial tools available in Latin America?

The new initiative focuses on public investments, especially in publicly traded debt securities. For many years, the government used the legal reserve to finance its public debt but stopped 45 years ago. At the time, the stock market was a huge financing source for SMEs, though this later stopped and was never brought back. If the stock markets started attending to smaller companies with short and medium-term issuances, for working capital or specific projects with a three to a six-year term, it would be an interesting financing source for these companies. SMEs represent the majority of companies. Even if their productivity is lower than large companies, they attend to interesting markets and have positive impacts on generating employment. As a consequence, there should be more financing sources than development and commercial banks and non-bank institutions. The investment vehicle that we will launch is a debt fund strictly related to the debt capital market.

In what ways are you further diversifying your portfolio in 2023?

In addition to the previously mentioned initiative, we will also launch the Fund of Funds Mexico Venture III. It is a fund of funds destined to invest uniquely in venture capital funds and jointly coinvest with them. We are a comfortable co-investor for fund managers. We do not want to compete with other funds.

How are you preparing for the post-pandemic era transition?

Now, for the change of administration, I expect some sectors to accelerate growth. In 2023, we expect to return to the level of investing we performed up 1Q2020. We are observing an acceleration in investments in technological innovation companies, though it is a complicated sector. However, the energy sector is an interesting area for us to invest in over time. Private equity should be reactivated, though rescuing it will require a great deal of work. It is not only about Mexico; all of Latin America’s private equity is going through a difficult time. There is little interest from international investors, and most funds are having problems collecting capital to invest in Latin American countries.

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