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Mexico’s Landmark Energy Reform Presents New Investment Opportunities

15 January, 2014

Vincente Fox, a former president in Mexico, has announced the creation of a $500 million fund to drive investment into the nation’s newly opened energy sector, reports the Financial Times. This opportunity is sure to be just one of many to come following Mexico’s historic energy reform, which passed into law in late 2013. The sweeping energy bill opened up the nation’s oil and gas industry to foreign investment, breaking a 75-year monopoly by state-run oil giant Petroleos Mexicanos (PEMEX).

Fox, who is also a former Coca-Cola exec, told Financial Times Beyondbrics blogger Jude Webber the fund has been in talks with international pension and endowment funds, as well as oil companies and construction firms who are likely to participate.

“It’s unique and the first fund in Mexico to specialize in energy and infrastructure,” Fox stated.

The fund’s goal is to provide funding for mid-sized companies in various sectors to increase technological capabilities; an area that is already in high demand. For example, with little up front investment, a number of existing water drilling firms could easily grow and incorporate the capacity to drill for both oil and gas.

“The fund should be formally constituted in the first quarter and operating within the first half of this year, and the idea is to finance a maximum of 10 projects,” writes the Financial Times. “Some, including wind power and biomass, as well as road concessions, have already been analyzed.”

Although $500 million may seem like a modest beginning,Fox also revealed that the fund’s creators are planning to launch a series of similar initiatives following this initial offering. 

“This energy reform opens three gigantic – and I mean gigantic – investment prospects in energy, electricity and infrastructure,”  Fox stated.

The former president went on to praise Mexico’s current president,Enrique Peña Nieto, for achieving the historic reforms, which have also included progressive changes to the nation’s telecom, labor, financial, tax and education sectors. Already, investors from Canada, the US and Abu Dhabi have showed interest in Fox’s new energy fund, which is yet another strong indication that a variety of opportunity lies ahead for Mexico.

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Topics: Investment Industry

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