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.