February 22, 2007
New Fund for Affordable Housing In Latin America
by Anne Moore Odell
With $100 million pledged from OPIC, the Alsis Latin America Fund supports home construction and
local capital markets in Latin America.
In July 2006, the Overseas Private Investment Corporation (OPIC) called for proposals for a private equity investment fund to help
bolster housing in Latin America. In January 2007, OPIC announced that Alsis Funds was the recipient of $100 million to help with
community development projects in Latin America, starting in Mexico and Central America.
OPIC, an agency of the US government, helps US businesses invest overseas. At the same
time, OPIC fosters economic development in new and emerging markets. This new fund fits with OPICís
mission of endorsing healthy development in housing and mortgage finance with the support of US
private sector capital and expertise. Community development projects such as this act as bridges
between under-served people and capital sources.
Of late, OPIC has focused on affordable
housing and mortgage finance. Not only is housing needed in Latin America, housing serves as a
platform for secondary economic growth as homeowners use their houses as collateral to establish
businesses. Tim Harwood, OPICís public affairs specialist said, "OPIC has been working for a number
of years to leverage the experience of American companies to facilitate the growth of secondary
mortgage markets in Central American countries."
"There is a large affordable housing
deficit in Latin America with extreme market inefficiencies," agreed Alfonso Montiel, co-founder
and Managing Director of Alsis Funds. Florida-based Alsis plans to increase and improve affordable
lending in emerging markets by enhancing liquidity through the acquisition of loan portfolios and
capital market securitizations. In a securitization, securities are issued representing interests
in pooled assets.
With a targeted capitalization of $300 million, the Alsis Latin America
Fund looks for
equity capital from institutional investors, investment banks, multilateral
lending agencies, and high net worth individuals. With a third of this capitalization coming from
OPIC, Alsis is well on its way to meeting its goal.
By focusing on residential loan
portfolios, in particular the affordable housing segment, Alsis will work in the secondary market
to avoid competition with local primary loan originators. Equally important, it will build on the
technology and processes developed through the securitization of residential loans to stimulate
future activity in the affordable segment of other asset classes throughout the region.
"The objective of the Alsis Latin America Fund LP is to generate strong risk adjusted returns
by acquiring asset-backed loan portfolios in Latin America and securitizing them in local and
international bond markets" Montiel told Socialfunds.com. "However, Alsis Fund investments include
other eligible asset classes such as loans backed by non-residential assets, micro-finance,
commercial real estate, and land," he added.
The Alsis Fundís managers have extensive
experience in capital markets transactions and have closed over US$1 billion of mortgage-backed
securities in countries such as Mexico, Argentina, and Colombia. Xavier Gonzalez-Sanfeliu,
co-founder of Alsis, gained experience as Head of Emerging Markets Securitizations for Bear
Stearns. OPIC selected Alsis because of its successful track record providing mortgage finance to
markets in Central America and Mexico. However, because it is a mortgage finance vehicle, Alsis is
somewhat different than the typical OPIC investment fund manager.
Maintaining itself by
charging market-comparable interest, fees and insurance premiums to the US companies it supports,
OPIC costs the U.S. taxpayer nothing, but instead operates at a surplus, reports Harwood.
OPIC has helped develop more than a dozen housing projects around the world, facilitating both
housing construction and the provision of mortgage finance. It also held a well-received housing
conference in Cape Town, South Africa, last May, which drew more than 270 US and African
participants and representatives from 21 African countries to learn about housing investment
opportunities in Africa.