LatinFinance - September/October 2013 - 50

2025,” he says. “if we look at that requirement, we expect the private sector ought to
have a role to play in bringing cost-competitive capacity to develop.”
mexico’s stable political environment,
well-defined legal system and favorable economic outlook give investors the confidence
they need, Walbridge says, and opening
the power generation sector would mean
more opportunities for domestic and foreign
capital.
Walbridge says macquarie would consider investing in brownfield infrastructure
projects.
“We may be helpful in assisting them to
recycle current capital,” he says. “it’s an opportunity for infrastructure players like us to
come in to some of those assets and free up
government capital for the government to
invest in new projects.”
Legal framework
But many questions remain unanswered including — crucially — where the financing for
new projects will come from. cesar Vargas,
responsible for public-private partnership
(PPP) transaction advisory for the international finance corporation (ifc) in mexico,
says lenders will need to consider PPPs and
joint ventures with Pemex for infrastructure
financings.
“if you’re a lender, it is very likely that
you’ll be able to participate in any of these
structures,” he says. “Given the significant
size of the required investment in the next
five years, it’s envisaged that this will be
covered by a combination of private and
public funds.”
the ifc has invested $831.3 million in infrastructure and natural resources in mexico
since January 2001 and helped open infrastructure sectors to private investment.
in 2012, then-president felipe calderón
introduced a PPP law that experts say added
clarity to a previously complicated framework. But the timing of the law, which came
into force just before the new administration
took office last December, has meant concessions have yet to be awarded under the new
legislation.
the law outlines the allocation of risks
between the mexican government and
potential investors in PPP projects. instead
of piecemeal secondary regulations, it sets
out the rights that investors and developers
can be clear on as they invest.
“the PPP law is leveling the playing field
by reducing the legal risk to which investors
are exposed in these types of projects,” says
ignacio Segura, a partner with White & case.

50 l atinfina nce.com - September/October 2013

cheryl edleson Hanway, the ifc’s head
of infrastructure investments for mexico,
sees the PPP law as positive for the sector.
“You’re going to see more projects under
PPP structures coming out to market,” she
says.
“You’re going to need to get the financing
lined up, but step one is structuring something that, when the government puts it out
for public bid, actually successfully receives
tenders and doesn’t turn into a failed bid
where no one is interested.”
Waiting game
Yet investors are still waiting to see evidence
that the government can put viable, bankable projects together for private sector participation; they also await clarity on a raft of
secondary laws that would define investor
involvement in the infrastructure sector.
edleson Hanway says investors want a
better understanding of capex and risk allo-

ANTONIO SIBAJA, AFORE XXI BANORTE

“If the structural
reforms create
an envIronment
In whIch foreIgn
Investors can come
In, we’re goIng to
be talkIng about a
vIrtuous cycle of
cooperatIon from
local Investors and
the development of
Infrastructure”

cations, among other factors. this includes
making sure the private sector is taking
on risks it can control and manage, with a
structure that provides financial visibility
and attractive returns.
Bank lenders will also want to see sustainability and future cash flow against a
predictable and stable regulatory backdrop, she adds.
“there’s a lot of capacity on the private
investment side, as well as mexican and
international bank liquidity to support
solid projects, so people are standing
ready waiting for announcements of what
in the government’s six-year plan will start
coming to market as tangible opportunities,” she says.
Ultimately, spending on infrastructure
will improve the efficiency of mexico’s
communication and transport sectors,
says antonio Sibaja, portfolio manager
at afore XXi Banorte, while an improved
investment climate should help encourage
afores and other institutional investors to
increase their exposure to infrastructure
assets.
“if the structural reforms create an environment in which foreign investors can
come in, we’re going to be talking about a
virtuous cycle of cooperation from local
investors and the development of infrastructure,” he says.
Attracting investment
the hope is that better infrastructure will
also encourage manufacturers to invest,
which in turn will create more investment
opportunities.
Sibaja says it maintaining growth momentum for the auto industry — which has
nearly doubled in size since 2009 — will
be particularly important in this regard.
nissan has a facility in the country and is
building a second; Honda and mazda are
building plants; and audi has selected a
site.
“the needs for transportation and
communications are closely related to
mexico’s growth potential,” he says. “if
growth opportunities are really materializing then there will be more demand for
communication and transportation infrastructure, because more projects will be
on the table.”
companies operating in mexico are
starting to see some of those opportunities.
Kansas city Southern de méxico (KcSm),
the local subsidiary of the US railroad company, has had a concession agreement in
the country since 1995 in the country, and


http://www.LATINFINANCE.COM

LatinFinance - September/October 2013

Table of Contents for the Digital Edition of LatinFinance - September/October 2013

Latin Finance - September/October 2013
Contents
Front notes
People news
Debt news
Equity news
M&A news
After the storm
Advantage Mexico
Treading water
New structures
Mexico
Regaining the Initiative
Deficit Ahead
Building up
Switching Course
Brazil
Work in progress
Extreme makeover
Mind the gap
Brazilian life insurance
Andean
Breaking the fall
Reaching out
Market movers
Paraguay
Smoothing the cycles
Thinking big
Parting Shot
LatinFinance - September/October 2013 - Latin Finance - September/October 2013
LatinFinance - September/October 2013 - Cover2
LatinFinance - September/October 2013 - Contents
LatinFinance - September/October 2013 - 2
LatinFinance - September/October 2013 - 3
LatinFinance - September/October 2013 - Front notes
LatinFinance - September/October 2013 - 5
LatinFinance - September/October 2013 - People news
LatinFinance - September/October 2013 - 7
LatinFinance - September/October 2013 - Debt news
LatinFinance - September/October 2013 - 9
LatinFinance - September/October 2013 - Equity news
LatinFinance - September/October 2013 - 11
LatinFinance - September/October 2013 - M&A news
LatinFinance - September/October 2013 - 13
LatinFinance - September/October 2013 - 14
LatinFinance - September/October 2013 - 15
LatinFinance - September/October 2013 - 16
LatinFinance - September/October 2013 - 17
LatinFinance - September/October 2013 - 18
LatinFinance - September/October 2013 - 19
LatinFinance - September/October 2013 - 20
LatinFinance - September/October 2013 - 21
LatinFinance - September/October 2013 - 22
LatinFinance - September/October 2013 - 23
LatinFinance - September/October 2013 - After the storm
LatinFinance - September/October 2013 - 25
LatinFinance - September/October 2013 - Advantage Mexico
LatinFinance - September/October 2013 - 27
LatinFinance - September/October 2013 - Treading water
LatinFinance - September/October 2013 - 29
LatinFinance - September/October 2013 - 30
LatinFinance - September/October 2013 - New structures
LatinFinance - September/October 2013 - 32
LatinFinance - September/October 2013 - 33
LatinFinance - September/October 2013 - 34
LatinFinance - September/October 2013 - 35
LatinFinance - September/October 2013 - 36
LatinFinance - September/October 2013 - 37
LatinFinance - September/October 2013 - 38
LatinFinance - September/October 2013 - 39
LatinFinance - September/October 2013 - 40
LatinFinance - September/October 2013 - Mexico
LatinFinance - September/October 2013 - Regaining the Initiative
LatinFinance - September/October 2013 - 43
LatinFinance - September/October 2013 - Deficit Ahead
LatinFinance - September/October 2013 - 45
LatinFinance - September/October 2013 - Building up
LatinFinance - September/October 2013 - 47
LatinFinance - September/October 2013 - 48
LatinFinance - September/October 2013 - 49
LatinFinance - September/October 2013 - 50
LatinFinance - September/October 2013 - 51
LatinFinance - September/October 2013 - Switching Course
LatinFinance - September/October 2013 - 53
LatinFinance - September/October 2013 - 54
LatinFinance - September/October 2013 - 55
LatinFinance - September/October 2013 - 56
LatinFinance - September/October 2013 - Brazil
LatinFinance - September/October 2013 - Work in progress
LatinFinance - September/October 2013 - 59
LatinFinance - September/October 2013 - 60
LatinFinance - September/October 2013 - 61
LatinFinance - September/October 2013 - Extreme makeover
LatinFinance - September/October 2013 - 63
LatinFinance - September/October 2013 - 64
LatinFinance - September/October 2013 - 65
LatinFinance - September/October 2013 - 66
LatinFinance - September/October 2013 - Mind the gap
LatinFinance - September/October 2013 - 68
LatinFinance - September/October 2013 - 69
LatinFinance - September/October 2013 - Brazilian life insurance
LatinFinance - September/October 2013 - 71
LatinFinance - September/October 2013 - 72
LatinFinance - September/October 2013 - Andean
LatinFinance - September/October 2013 - Breaking the fall
LatinFinance - September/October 2013 - 75
LatinFinance - September/October 2013 - 76
LatinFinance - September/October 2013 - Reaching out
LatinFinance - September/October 2013 - 78
LatinFinance - September/October 2013 - 79
LatinFinance - September/October 2013 - 80
LatinFinance - September/October 2013 - 81
LatinFinance - September/October 2013 - Market movers
LatinFinance - September/October 2013 - Paraguay
LatinFinance - September/October 2013 - Smoothing the cycles
LatinFinance - September/October 2013 - 85
LatinFinance - September/October 2013 - Thinking big
LatinFinance - September/October 2013 - 87
LatinFinance - September/October 2013 - Parting Shot
LatinFinance - September/October 2013 - Cover3
LatinFinance - September/October 2013 - Cover4
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