BNY Mellon has launched an infrastructure fund to capture investment opportunities created by the upgrading of Latin America's dilapidated transport networks.
Latin America’s roads, railways and ports both air and sea, have long been a constraint to its economic growth, but after a combination of a relatively long period of political stability and robust economic growth, and with both the World Cup and the Olympics being hosted in Brazil in the next six years, all this is set to change according to Rio de Janeiro-based firm BNY Mellon ARX Investimentos, BNY Mellon’s dedicated investment management specialist for Latin America.
Soft launched in August and seeded with $200 million from a mixture of BNY Mellon and Spanish investor capital, the Dublin domiciled BNY Mellon Latin America Infrastructure fund is a Ucits III long only equity fund with daily liquidity.
The fund will be run locally by Bruno Garcia, who is also one of the managers on the BNY Mellon Brazil Equity fund. His team uses a combination of top down macro analysis and detailed bottom up fundamental analysis to run the fund and they seek to invest primarily in companies associated with infrastructure including capital goods, transportation, steel, telecommunications and energy in the key regions of Brazil, Mexico, Chile and Peru.
The fund aims to outperform the MSCI Latin America 10/40 Index benchmark over a three to four year period with an equal or lower volatility.
The fund’s capacity is $1 billion and although it focuses mainly on infrastructure, the team can also allocate a third of the fund to domestic names.
On the launch Jose Tovar, Managing Director at BNY Mellon ARX said: ‘We are living through an exciting investment era in Latin America. In addition to increasing political and macroeconomic stability and institutional and fiscal reforms across the region, we are also seeing a domestic consumption boom.
'Robust growth rates are now the norm rather than the exception with Brazil expected to increase its contribution to regional growth. Now more than ever before, there are better incentives for private infrastructure participation through public-private partnerships and increased government spending for planned major infrastructure projects. We strongly believe that the current economic momentum is likely to result in a prolonged period of sustained growth.’