R 201300Z MAR 09
FM SECSTATE WASHDC
TO AMEMBASSY BRASILIA 
AMEMBASSY SANTIAGO 
AMEMBASSY MEXICO 
AMEMBASSY LIMA 
INFO AMCONSUL SAO PAULO

UNCLAS STATE 026881 
 
 
E.O. 12958: N/A 
TAGS: EINV BR CI MX PE
SUBJECT: OPIC-SUPPORTED INVESTMENT FUND IN THE REGION 
 
¶1.  This is an action cable.  See paragraph 4. 
 
¶2.  OPIC management is considering support of a new $400-$500 million 
private equity fund, Paladin Realty Latin America Investors III, L.P. 
(the "Fund") that will be sponsored by Paladin Realty Partners, LLC 
(the "Sponsor"), of which a $200 million sub-fund will be supported 
by OPIC. The Fund is a real estate investment fund focused primarily 
on developing low and middle income housing in the target geographies 
of Brazil, Chile, Mexico, and Peru amongst other OPIC-eligible Latin 
American countries. This particular fund is a successor to the 
Sponsor's previous OPIC-supported fund, Paladin Realty Latin America 
Investors II, LP. The Fund will invest long-term capital 
appreciation, through privately-negotiated transactions, in equity or 
equity-related investments in new, expanding or other entities 
owning, financing, managing or developing real estate projects. 
 
The Fund's proposed investment strategy is to partner with local 
developers to implement value-added business plans. Many of these 
investments will be structured as "platform" companies, which will 
invest in multiple projects with a single company that is focused on 
a specific product type, market, and/or strategy. Generally, the Fund 
will own at least 50% of any investment or platform company. The Fund 
will typically co-invest with a local developer in financing each 
project. 
 
In addition to providing capital to the affordable housing sector 
throughout Latin America, the Fund is also permitted to invest in 
commercial real estate and hospitality sectors (such as office, 
research and development, resort and hotel, industrial and retail), 
but it is expected that the majority of the capital will be invested 
in the housing segment. 
 
¶3.  OPIC-supported investment funds are privately owned and managed, 
with OPIC support taking the form of a loan or loan guaranty that 
supplements each fund's private capital.  In July 2006, OPIC 
conducted an open and transparent call for proposals from qualified 
private sector fund managers for the formation, management and OPIC 
financing of one or more private equity funds that will invest for 
long-term capital appreciation in private companies in the housing 
and related sectors. OPIC received 19 responses to the Global Housing 
call for proposals, and selected Paladin's fund as one of the best 
that met the criteria of the call. The Fund, Paladin Realty Latin 
America Investors III, LP, is a follow-on fund from Paladin's first 
OPIC-supported fund, Paladin Realty Latin America Investors II, LP, 
which originated from the 2004 Latin America call for proposals. 
 
¶4.  ACTION REQUESTED: 
 
As part of OPIC's due diligence, OPIC requests post's comments 
regarding the objectives of OPIC's investment funds program and 
whether these objectives are compatible with the economic development 
programs of the target countries.  Any other comments relating to the 
funds' likely success in the regions or other considerations would be 
appreciated, including Post's opinion on (1) the need for such 
capital in the various markets, (2) availability of funds from other 
sources, and (3) local reputation of the prospective fund managers 
mentioned above in paragraph number two.  Please comment by cable to 
the department and reply to Bill Pearce, Director.  Replies may be 
faxed to (202) 218-0331. 
 
¶5.  OPIC appreciates Post's support. 
 
 
CLINTON