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IFC TO SUPPORT PERU'S NEWLY-ESTABLISHED PRIVATE PENSION SYSTEM


L. Joseph


WASHINGTON, D.C., Sept. 24, -- The International Finance Corporation (IFC) will invest up to US$700,000 for an equity stake in Horizonte AFP S.A., a recently-incorporated pension fund management company based in Lima, Peru. IFC is the private sector arm of the World Bank Group and the largest source of multilateral financing for private sector projects in developing countries. Horizonte's shareholding is made up of a strong group of institutional and individual investors including -- in addition to IFC -- Provida, one of Chile's most successful pension fund management companies; Corporacion Andina de Fomento (CAF), a development bank for the Andean countries; and Peruvian entrepreneurs Carlos Rodriguez Pastor, Alfonso Brazzini, Bernardo Rehder and Carlos BoloŇa. Horizonte will operate under a new system established by the Peruvian government in December 1992 that gives workers the option to contract private sector pension fund management services, disability and life insurance coverage. Peru is the first Lati
n American country, after Chile, to implement a private pension system. Horizonte is starting operations with an equity of US$10 million. The company's aim is to cover approximately 12-15 percent of the potential market. Pension funds under its management are expected to grow to over US$1 billion by 2002. Helmut Paul, Director of IFC's Latin America and Caribbean Department said: "The promotion of private pension funds, both in Peru and in other countries, is a clear priority for IFC. As an efficient alternative to the state-run pension system, Horizonte is likely to breathe new life into the local insurance industry and be better and cheaper to operate than the state pension system, providing for more reliable pension benefits." Other developmental impacts will include a more productive mobilization of the country's savings through a broad range of financial products and institutions that will allow private sector companies greater flexibility when financing their investment needs.

Horizonte AFP S.A.