Asset Management Platform

Seeking a strategic partner to spearhead the creation of an innovative investment platform with a unique approach diverges from conventional private equity models, aiming to appeal to compatible institutional investors interested in extended investment horizons.

Open until September 25, 2023

Background

IDB Invest is an international organization that was established in 1986 and began operations in 1989 with the mission of promoting the economic development of its regional developing member countries, which are located in Latin America and the Caribbean, by encouraging the establishment, expansion, and modernization of private enterprises in such a way as to supplement the activities of the IDB. As part of its mission, IDB Invest supports the private sector and state-owned enterprises (that do not benefit from a full sovereign guarantee) through financing NSG Projects and providing advisory and training services.

IDB Invest is an autonomous international organization and a member of the IDB Group, which also includes the IDB and the Multilateral Investment Fund (“IDB Lab”), which is administered by the IDB. IDB Lab is the innovation laboratory of the IDB Group and seeks to mobilize financing, knowledge, and connections to test early-stage entrepreneurial solutions and to develop the ecosystems where these can thrive.

Together, IDB Invest and IDB Lab wish to explore innovative alternatives to increase the equity and quasi-equity offering in LAC. Long-term equity and quasi-equity investments remain significantly underpenetrated in the Region, contributing to a persistent investment gap that prevents the Region from achieving sustainable long-run growth. IDB Invest and IDB Lab are looking for innovative mechanisms to address, at scale, the equity and quasi-equity needs of the Region, and to encourage more long-term and stable capital investment in LAC, as a driver for real social and economic change beyond economic cycles. In addition to further increasing their own equity and quasi-equity portfolio, IDB Invest and IDB Lab seek to mobilize capital from like-minded long-term institutional investors to address the long-term requirements of transformational investment opportunities (e.g., sustainable infrastructure, innovation & technology, financial inclusion, food security, climate change, education, and healthcare, among others).

Overview: 

The private sector in LAC is a strong engine of economic growth. The Region has high demand for investments, in particular for equity and quasi equity instruments. The demand comes especially from high-quality sustainable infrastructure and technology disruptive firms and is expected to grow the next years.

In infrastructure alone, the IDB estimates that LAC must invest a minimum of US$2.2 trillion over the next decade between 2020-2030 (i.e., 3.12% of the Region’s GDP every year until 2030 versus 1.8% invested on average during 2008-2019) to achieve the Sustainable Development Goals (SDG) by 2030. ¹ ,² 

The technology and digital opportunities in LAC are also very large. In e-commerce³ , for example, the adoption in LAC is still lower than in other emerging regions but poised for significant growth, with online retail sales expected to grow from ~US$85 billion in 2021 to ~US$160 billion by 2025. Start-ups and venture capital in the digital economy create an avenue for societal and technological progress together with the ability for visionary investors to earn significant returns by investing in companies that could be dominant for generations.

The strong demand for investments, allied with the significant under-penetration of private capital in LAC’s economies, suggest that the Region has not been able to tap into the considerable supply of capital from global institutional investors (sovereign wealth funds, endowments, foundations, family offices, pension funds, and life insurance companies), which hold around US$100 trillion in assets under management.4 The challenges in raising private capital for the Region include established structural problems such as sluggish GDP growth, political instability, social inequality and high dependence on commodity exports. Additionally, global institutional investors tend to be sizable and therefore look for large commitment amounts, which is difficult to achieve in the Region due to a lack of dedicated vehicles with sufficient scale. As a result, most investors have overlooked LAC economies when allocating their emerging markets portfolios.

Objectives: 

IDB Invest seeks to identify a partner (“Strategic Partner”) to lead the development of an investment platform with an approach that is alternative to traditional models of private equity and aiming to attract like-minded institutional investors for longer investment tenors (the “Platform”).

IDB Invest expects to support the Platform by providing technical assistance, as well as strategic direction and input on the design and establishment of the Platform. This initiative is aimed at promoting availability of large-scale, long-term private capital, in particular growth equity and quasi-equity, in developmental sectors aligned to IDB Group’s private-sector business priority areas in the Region. The Platform will have a LAC geographic focus, with the mandate to invest funds exclusively in IDB Group LAC member countries, and adopt policies consistent with those of IDB Group, as applicable.

The Platform is expected to be structured as a private, independent entity, with no single controlling shareholder and a mandate to launch and manage large-scale LAC-focused investment funds. The Strategic Partner will be expected to invest in the Platform alongside IDB Invest, IDB Lab and other anchor investors.

The Strategic Partner should have extensive experience raising and managing asset management platforms and investment funds and a wide network across the global investment community and the ability to attract and retain talent to implement and develop the Platform. The Strategic Partner should also have significant experience structuring and managing investments specifically in LAC.conventional private equity models, aiming to appeal to compatible institutional investors interested in extended investment horizons. 

Final message

We cordially invite eligible individuals & firms to participate by submitting their applications in response to Request for Expressions of Interest (REOI) #IDBInvest23-001, titled "Asset Management Platform Strategic Partner."
 
For detailed insights into the application process, visit this link