MAPFRE announces €250m private equity investment

Written by Adam Cadle

22/06/2020

Spanish insurance company MAPFRE has announced an investment of €250m in private equity through a new co-investment fund for institutional investors.

Together with Abante and Altamar, it has launched a fund of funds. MAPFRE Private Equity FCR, which has already been registered with the Spanish National Securities and Exchange Commission (the "CNMV"), will bring together the existing private equity investments of all the companies in the group, as well as those made going forward, and will apply a very conservative strategy, in line with MAPFRE's investment policy.

In particular, the portfolio created will be balanced in terms of risk and return, and will cover various investment periods, company sizes and geographical regions, though will be concentrated in the US and European markets. It is an evergreen vehicle — a type of fund that meets the needs of the 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 a result, it offers other investors the chance to participate thanks to 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.

"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. In addition, the market moment is very attractive because great opportunities can be generated in the coming months," José Luis Jiménez, group chief investment officer at MAPFRE said.

By taking this step, MAPFRE is 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. In the same vein, the board of directors authorised another €500m in alternative investments almost a year ago, in addition to the €550m already approved.

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