Yesterday, Mexico’s National Bank of Public Works and Services (Banobras) and ProMéxico signed a collaboration agreement with the objective of promoting investment opportunities in infrastructure and energy projects for investors, developers and banks, both national and international. As part of this promotion, ProMéxico will make use of the innovative Projects Hub, a portal of upcoming infrastructure projects that was designed by the Mexican government and is administered by Banobras.
In this week’s Interview of the Week, taken from Mexico Infrastructure & Sustainability Review 2018, we feature the interview of Sergio Forte. While working in his previous position as Deputy Director General of Investor Relations and the Investment Projects Hub at Bancomext, he played an integral role in developing the platform. He has now moved to Banobras as Deputy Director General of Investor Relations to oversee its implementation. Here, he discusses its features and benefits with Mexico Infrastructure & Sustainability Review.
The environment surrounding infrastructure development includes an uncertain political environment, rising interest rates and a shortage of public budget for projects. But investors’ appetite to invest in Mexico continues to grow. One of the top demands industry players have is to ensure transparency and access to information for infrastructure projects, especially since entering the Mexican market with just one project is extremely expensive.
As a way to link investment projects with domestic and foreign potential investors, as well as encourage new companies to participate in bids, SHCP, through the Mexican system of development banks, developed Mexico Projects Hub which is an online database of Mexico’s current infrastructure projects. “As a development bank, we have also been on the other side of the table and we understand the importance of having clear information about upcoming projects,” says Sergio Forte, Deputy Director General of Investor Relations at Banobras. “Mexico Projects Hub will increase transparency and investment in Mexican infrastructure.” This free bilingual platform divides projects into four different stages: preinvestment, bidding, execution and operation to give investors insight throughout all phases of project development. “The main objective of Mexico Projects Hub is to display project information alongside legal and financial data for the entire industry to see,” he says. “It is a tool to provide players with information about similar projects that will increase their appetite to invest even more.”
The hub contains information about greenfield and brownfield projects across all sectors within the industry including electricity, transport, telecommunications, water and environment, real estate and tourism, mining, hydrocarbons and social infrastructure. The hub lists 75 different types of financial instruments such as Fibras and CKDs that can be used to invest in the maintenance and improvement of existing infrastructure. “There is a great deal of opportunity in this sector,” says Forte. “The amount of money in CKDs that can be allocated to projects equates to approximately MX$50 billion of capital, ready to be invested into the industry.” Apart from listing the basic information such as participants, amount invested and entities involved, Banobras included links to all of the governmental websites and CompraNet where users can find more information and contacts. Each project has a unique File Number and QR code to facilitate information sharing and tracking of changes to the project. Forte believes that this platform will help reduce international and national investors’ costs and time by allowing them to gain better visibility of Mexico’s infrastructure pipeline.
And the platform could not have come at a more opportune time for the industry. Given the shortage of public funds, SHCP announced in March that it wants to encourage the development of PPPs for infrastructure and released 30 projects involving an investment of over MX$60 billion. The benefits of PPP projects are multiple, given they have a mature regulatory framework and offer more attractive conditions for both investors and participating companies. Although some companies are cautious about the recent changes made to the PPP Law, PPPs and public works have become more efficient in the last few years due to the adoption of best practices across all sectors.
SHCP took on the challenge of creating the Projects Hub — the first of its kind in Mexico -– to increase transparency and access to these PPP projects, but it has faced various hurdles along the way. Despite the hopeful announcements of more PPP projects, many players in the industry feel there is a lack of innovative projects. “There is always the critique that projects are the same and that there are no new project opportunities. But, what matters is that there is a steady stream of projects being carried out,” says Forte. “Developers can find ways to incorporate innovation in the structure of the project or it can be constructed by a group of companies.”
This platform is expected to level out the playing field when it comes to bids and ensure that there are new companies stepping up to each challenge. One of the main objectives of the hub is to allow investors and participants to give feedback on each of the different projects, especially when bids are about to start. “It is becoming more common for the same two to three companies to bid in all of the projects in certain sectors in Mexico,” Forte says. “The platform will encourage more companies to seek involvement in the industry.”