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Mexico Announces $14 Billion In New Infrastructure Deals

07 July, 2015

Mexico’s communications and transport ministry,Secretaria de Comunicaciones y Transportes (SCT),is reportedly working to carry out 126 public infrastructure projects throughout the country,using a combination of private and public resources,as well as private funds. The projects are part of Mexico’s national infrastructure program,which has pledged a total of $515 billion in new investments by the year 2018.

“We have a great opportunity,particularly in terms of the national infrastructure program,for greater private sector investment and to use mechanisms like public-private partnerships,” stated Luis Videgaray at a press conference. “This is particularly evident in the energy sector.”

According to Reuters,the world’s largest asset manager,BlackRock Inc.,is one of the entities looking to cash in on new infrastructure projects in Mexico and other institutional investors,such as private equity firm KKR,have also been reportedly looking to invest in infrastructure projects in Mexico.

BlackRock is currently setting up a team of specialists to work out of its Mexico City offices,which currently employ about 30 people,many of which are involved with its iShares Exchange Traded Fund (ETF) business 

“Mexico is finally beginning to unlock its true potential as an economic powerhouse,” stated BlackRock CEO Larry Fink,who has encouraged young people to live in Mexico City on the company’s blog. “Over the next few decades,capital is going to flow more effectively in Mexico,the workforce will become better trained,and it will be easier and easier to do business.”

Most recently,Mexico’s state power utility,Comisión Federal de Electricidad (CFE) has joined with the private sector to work on 48 energy infrastructure projects in Mexico,totaling investments of $11.5 billion. Tenders for 12 of the projects were announced in January,but Mexico’s national infrastructure program includes 15 renewable energy projects,along with 11 natural gas pipelines,six natural gas-fired power generation plants and 16 electricity transmission and distribution initiatives.

“The 15 renewable energy projects comprise eight wind farms,two hydroelectric plants and five geothermal plants,” stated Enrique Reza Ochoa,CEO of CFE. “Together these will add 2,700 MW to Mexico’s installed generation capacity.”

In March,Mexico’s energy regulator also said it would permit oil companies to have a larger share of the profits and more flexibility in the contracts after opening its energy sector to outside investment last year. Execs at international oil giants such as BP and Occidental Petroleum Group,among others,have already expressed interest in the new opportunities.

In addition,Reuters reported that Mexican bank Grupo Banorte is busy setting up a $3 billion infrastructure fund with a North American partner,which an unnamed source told the news outlet would likely be Canada’s second-largest pension fund,Caisse de depot et placement du Quebec.

“In October,Reuters reported that Caisse de depot et placement du Quebec was poised to unveil a large infrastructure-related investment in the Latin American country,” Reuters writes from Acapulco last month. “Once source said Caisse and a Mexican institutional investor planned to create a joint fund to invest up to several billion dollars in domestic infrastructure projects.”

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