5.6.3. Investment Portfolio of Peruvian Pension Funds

Today four private Pension Funds are active in Peru, with nearly identical market shares.

market share as of August 2012" class="wp-image-11415 size-full" height="166" src="https://sgbs.ch/wp-content/uploads/Illustration-20-Pension-Funds-in-Peru-and-market-share-as-of-August-2012.png" width="351"> Illustration 20: Pension Funds in Peru and market share as of August 2012¹²⁷

Their investment portfolio profile is adjusted to the type of fund (Type 1, 2 or 3). By end of 2012 their total portfolio included among others 26% of domestic stocks, 17% of local bonds and 15% of government bonds and 30% foreign investment (mutual funds, shares and bonds).

Peruvian Pension Funds have invested in a number (about 40) of infrastructure projects which cover the sectors of telecommunications (15%), electricity (56%), transportation (20%), sanitation and health (1%)¹²⁸.

As of end of 2012 their investment in infrastructure accounts for over 11 percent of their portfolios, which equates to more than 3,5bn US$¹²⁹, in form of debt and equity positions for projects and companies¹³⁰ providing infrastructure in Peru. The gross parts (73%) of the funds are channelled indirectly through the acquisition of shares and corporate bonds of companies undertaking the infrastructure projects or through specialized mutual funds¹³¹.

Direct investment into infrastructure projects was done via bonds and an infrastructure trust, which was initiated by the four AFPs and has until today participated in two public-private partnership projects that were furnished with governmental guarantees¹³².

All infrastructure projects with involvement of Private Pension Funds have to obtain authorization from the SOB to be included on the list of eligible investments for pension funds¹³³. The listed projects (currently 64) enjoy fast track bid process and had a deadline of approximately one year to be awarded.

Despite in infrastructure investments are also made in the hydrocarbon sector. The Peru LNG project, which was developed by an international project consortium in 2007 is with an investment volume of 3,8bn US$ one of the largest projects ever realized in Peru. Most of the funds were raised through sponsor equity and loans (commercial and IDC¹³⁴) but 200 million US$ have been funded through the issue of bonds in the Peruvian Capital Market which have been bought mostly by the Peruvian Pension Funds¹³⁵.

¹²⁷ BBVA Horizonte, www.bbvahorizonte.com.co,
¹²⁸ AFP Association of Peru, www.asociacionafp.com.pe/inversiones, 08/1/2013
¹²⁹ AFP Association of Peru, www.asociacionafp.com.pe/inversiones, 08/1/2013
¹³⁰ Horizonte, Integra and Profuturo are the major shareholders of Maple Energy plc holding 29% of shares as of October 2012 (Maple’s website). Maple is an integrated independent energy company with assets and operations in Peru. It engages in numerous aspects of the energy industry, including the development of an ethanol project, exploration and production of crude oil and natural gas; and refining, marketing and distribution of hydrocarbon products.
¹³¹ BBVA, Economic Analysis, Pensions, February 2011
¹³² Taboada waste water project,
¹³³ BBVA, Economic Analysis, Pensions, February 2011
¹³⁴ IDC: International Development Bank
¹³⁵ Hydrocarbon Technology; www.hydrocarbon-technology.com