A little over two years ago, Principal’s Latin American operation began the reorganization of its presence in the region.
At the head of the process, the executive vice president and president of the firm for Latin America, Pablo Sprenger, who reorganized his structure in search of moving from a model focused on each country where it operates, to one focused on regional leaders for its three businesses in Chile, Brazil and Mexico: pensions –AFP Cuprum in Chile-, asset management, and wealth administration.
Across its three verticals, the firm closed 2025 with more than US$150 billion under management (AuM).
The reorganization also came with the mandate to grow in asset management – asset and wealth management – where they see the main vein of expansion.
“Asset management is an opportunity and a challenge at the same time,” Sprenger told DF.
The opportunity is found, in the executive’s opinion, because in the region more flows of resources are entering the pension systems “and that is going to cause the pension funds of Latin America to have to invest,” he explained.
To this end, Principal established a regional structure headed by Fernando Torres and reinforced its team with the hiring of former Santander, Juan Martín del Burgo, and former Vinci Compass, Jorge Díaz, for the institutional business.
“We do not want to beat the other brokerages or have the greatest number of transactions. Where we do want to be strong is an investment advisory business for clients, and where we are going to continue measuring ourselves is in the assets under management.”
The executives of Principal’s Chilean operation also took on regional leadership positions, Horacio Morandé in wealth management and Diego Ulloa in investment solutions.
During the period, the firm added more than US$2 billion to the AuM of its asset management vertical in the last two years, reaching a total of US$15 billion. “We had a very powerful 2024, growing more than 20% in assets, bringing in new money of over US$ 1,000 million, which, in Latin America, was unprecedented for us, and we will repeat it in 2025,” he stated.
Currently, the company’s strategy advances on two fronts: growth and divestment. On the one hand, they are preparing the opening of a securities agency in Chile in 2026 – which will become a stock brokerage in 2027 – and they are finalizing the closing of the sale of their annuities business to Grupo Santander.
– Are there any businesses left in the region that Principal is looking to exit?
– With the transaction (to Santander), we are left with all the businesses that we want to be in and grow organically. We no longer have companies that strategically do not fit our growth plan.
Platform for high net worth
– Why launch a securities agency?
– We had been providing advice to high-net-worth clients in a “single-company” manner. We had the AGF for fund product claims, the insurance company for insurance with savings, and at AFP Cuprum we have Account 2 and the APV.
We needed to complete part of the product offering and better operationalize the deployment for customers. And although it is a securities agency, we call it a product platform so that clients in our target segment and our network of independent advisors can come to Principal and get all the investment solutions they need in one place.
– What other opportunities do you see?
– We are going to bring ETFs, and when we eventually have the brokerage, we are going to offer shares. We want to enter the world of advice and more sophisticated product offerings for high-net-worth clients.
– What regulatory stage are they in?
– We are in conversation with the CMF on risk issues, system implementation – which is the most challenging – and controls. The regulator has already given us some approvals and is asking us for other things that we are working on.
– How will they compete in this industry?
– We are not here to compete with the platforms. We don’t want to beat the other brokerages or have the largest number of transactions. That is not our business and it is not our strength.
Where we do want to be strong is in the investment advisory business for clients and in the number of users we will have in the high-net-worth segments. We want to have a very good platform for our clients, not to compete with others.
The demand for data centers “places Latin America and Chile, especially, as a center of giant potential. We want to be pioneers in the generation of exclusive real estate funds in data centers in the region.”
Bet on alternative assets
Within the asset management product offering, Principal placed private markets at the center of the strategy, given a demand for the segment that would grow hand in hand with pension funds.
“The big bet we are making at Principal globally and at the Latin American level is to be a relevant player in the world of alternative assets for institutional clients,” said Sprenger.
Meanwhile, the president of the firm for the region announced that “we are going to be very open to exploring opportunities for organic and eventually other types of growth in the world of alternative assets.”
– Where is the biggest opportunity?
– In Mexico, in the Afores, which are the AFPs there, and they are implementing an investment plan that will allow them to allocate up to 30% of their assets in alternative assets.
We are very close to launching an infrastructure fund in partnership with a large global bank to offer investment solutions in private infrastructure debt to institutional clients in Mexico.
– And in Chile?
– We are working on our second private debt fund and strengthening the team.
Also, in real estate we have great strength and there is an asset that is going to grow a lot in Latin America, which are data centers.
The demand for data centers, given the development of artificial intelligence, and what they need, in terms of not only square meters, but also access to energy or water, places Latin America and Chile, especially, as a center of giant potential. We want to be pioneers in the generation of exclusive real estate funds in data centers in the region.
– In what way?
– Setting up funds in which their underlying assets are local data centers in Brazil, Mexico and eventually Chile.
The pension reform benchmark
-How do you see the first proposal for the generational funds of the pension reform?
– We like generational funds, they are a good solution for clients, but how they will be implemented will be key.
We are reviewing what having 15 funds would imply in terms of complexity for clients, for systems, for investment teams. I think 15 is a lot of different buckets.
– What other aspects are you reviewing?
– It is super relevant if the benchmark is going to be defined centrally by the regulator or some entity, which would have a cost in competition. A good practice that has been implemented elsewhere is that the benchmark is defined by each of the AFPs, and is presented to the regulator for approval.
The other thing is that, if it is a single benchmark, who is responsible for the poor performance? The regulator? Fiduciary duty is diluted a bit.
– And the deadlines?
– Implementing the bidding for the stock of affiliates at the same time as the generational funds poses a very large systemic execution risk.
– What do you recommend?
– Not doing it at the same time, and that implies a postponement of at least a year, giving time to the investment teams and the capital market.
