MEXICO CITY: Mexico’s President, Enrique Peña Nieto, has blasted the pessimists who are upset that the country’s sweeping structural reforms are not yet bearing fruit. CDPQ, a Canadian fund, is not one of them, and is pouring $1.1bn into Mexico to prove it.
The Caisse de dépôt et placement du Québec, one of North America’s largest fund managers with investments in Heathrow Airport, the Eurostar and the port of Brisbane, is teaming up with three of Mexico’s top pension funds and other institutional investors to pour $2.1bn into infrastructure projects over the next five years, writes Jude Webber in Mexico City.
CDPQ putting $1.1bn into the new trust, called CKD Infraestructura Mexico – its single biggest one-time investment in what it sees as long-term growth markets, including China, India and Brazil. What is more, CEO Michael Sabia told the FT
Mexico’s top three private pension funds (known as “afores”), Afore Banorte, Afore Banamex and Afore Sura, as well as Pensionisste, which manages state workers’ pensions, and Fonadin, an infrastructure fund, are putting $1bn into the partnership.
The companies have already identified five key areas of interest in Mexico, a Nafta member that is increasingly integrated with its two North American neighbours: pipelines, especially for transporting cheap US shale gas down to Mexico; electricity generation and transmission, including renewables; transport infrastructure like airports, ports and toll roads; water utilities and so-called social infrastructure, like hospitals and research centres.
Negotiations have begun with Pemex, Mexico’s state oil company, said Rashad Kaldany, CDPQ executive vice president for growth markets, and deals with CFE, the state electricity company, are also in its sights. Pemex has recently sealed deals with funds BlackRock and First Reserve to fund a key pipeline project and is on the lookout for more private investors to partner with.
A previous toll road operating partnership between CDPQ and ICA, a construction company, is also being sold into the new trust, and the approach, at least at first, will be to focus on brownfield projects that have already been built.
“We are doing something different. As far as I know, this hasn’t been done in North America before or in the world,” said Mr Sabia, referring to the partnership with private pension funds which will allow Mexicans ownership of key infrastructure projects. The structure can potentially be replicated in other Latin American markets and India, he added.
CDPQ stresses it is a long-term investor and Mr Sabia said that despite rule of law concerns in Mexico, he sees Latin America’s No. 2 economy as poised for take-off because of the marriage of stable macroeconomic management and structural reforms. As a result, further down the line, he hopes to invest in the manufacturing sector, consumer goods and real estate in Mexico.
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