He was a member of first investment team of Prima AFP and one of the founders of Credicorp Capital. He claims to be an evangelist of the great opportunities that the investment bank has built in the region, which is why he agreed to move to Chile with his family to run Credicorp Capital’s Asset Management business. James Loveday tells us his plans.
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How are you doing in the asset management business?
In this business we are an important player in the Latin American field, with emphasis on Peru, Colombia and Chile. In this year We have had a very positive performance of all fixed income assets in local and foreign currencies due to all the prospects of interest rate reductions. We are growing double digits in all customer segments. In the segment of individuals, Peru, Colombia and Chile have a very marked bias in fixed income and this has had good performance and growth.
As asset managers, what are you investing in?
We are investing a lot in the private debt business for medium-sized companies. In Peru we have a fund of almost S/600 million, especially for institutional clients who are about to finish investing. We have raised the first phase of the second fund and we are in the investment process. We have been developing this business in Peru since 2020. Then, we took it to Colombia, where we launched a fund of US$300 million in Colombian pesos, of which today more than half is invested. The next step is to do it in Chile and eventually we will do it in Mexico.
When will they arrive in Chile?
At the end of this year we should launch our private debt practice in Chile. We have seen good opportunities there.
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Is there room to grow in the private debt business in Peru?
In Peru, the amount of financing we offer to companies is in the range of between S/15 million and S/70 million. Generally, we are moving closer to the upper limit. We are talking about a company of a certain size. in this market there is still a very big space to cover.
However, since Chile has a more developed financial market, could this segment already be served?
Chile is more developed than Peru when we look at typical debt to GDP ratios. However, There are several factors that lead to many opportunities to finance medium-sized companies. Firstly, there is a high concentration of credit in large companies. Second, the loss of liquidity in the capital markets due to the outflow of funds from the AFPs also affected Chile. Third, I would argue that Basel III and bank capital requirements make the cost of capital too high to reach the entire business spectrum.
What other asset management businesses do you see opportunities in?
In the real estate world we believe that there is an interesting opportunity in the logistics and residential rental sector, also known as ‘multifamily’. It is very common for people to buy an apartment to rent. In the case of ‘multifamily’, professionally managed buildings are built with ‘amenities’, such as gyms and ‘star’ rooms for a young single population. This is something we have been doing in Chile for more than 6 years with very good reception. Today we are in the process of launching a fund in Perufocused on the world of residential rentals and the logistics sector.
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What is the potential of ‘multifamily’ in Peru?
It is a business that has grown a lot in Chile and the opportunity exists in Peru and Colombia. The great challenge is how opportunity finds capital and that is where we come to play. Here the expertise is needed to manage the asset. Why is there potential? Because it is much more difficult for a person who has graduated from university for three or four years to buy an apartment, so they have to rent. When you look at the figures for renting versus buying apartments, There is a very large universe of people who want to rent. Although they may be doing it to a natural person, there is a much more powerful value proposition that can be offered if the property is professionally managed.
In Peru, when do you plan to launch this fund?
Our goal is to launch the fund before the end of the year. We are aiming for it to have around S/150 million. It is a fund that is going to mix the world of logistics with something from the ‘multifamily’ world, because it must be developed little by little. We must validate the thesis so that the final investor sees that it makes sense and generates greater appetite.
What are you investing in in the world of alternative instruments?
Today we have a very powerful private infrastructure debt practice in Colombia, where we have invested and have investment commitments for a little less than a trillion dollars (one billion dollars). Today we are finishing investing the Latin American equity infrastructure fund. We have seen interesting topics in different aspects of infrastructure. All the dynamism that the Port of Chancay is going to generate has put Peru back in the focus of Latin America for all the businesses that this enables. Infrastructure is a super-relevant issue to complement all the port development that is being done from Chancay.
What opportunities do you see in Chancay at the moment?
Obviously, there are going to be needs for roads. We are seeing opportunities on the infrastructure side. Investors in the logistics world have their own dimension. If we’re looking at something in that field, it’s still private. Furthermore, the infrastructure linked to Chancay is not isolated, because its connection with the rest of the country’s infrastructure is required. This has an effect on the entire supply chain.
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