BlackRock expands presence in Mexican infra

Just three months after making its first investment in Mexican infrastructure, BlackRock has announced it will acquire Infraestructura Institucional (I²), a Mexico City-based infrastructure investment firm, for an undisclosed amount.

“This acquisition advances BlackRock’s growth strategy in Mexico and Latin America and builds upon our well-established track record in the region,” said Armando Senra, head of the Latin America and Iberia Region at BlackRock, in a statement. “Mexico is well positioned for long-term economic growth and we are excited to further expand our presence in the country.”

The transaction, which is expected to close in the fourth quarter of 2015, will add approximately 25 I² employees to BlackRock’s Mexico-based staff and $1 billion to its assets under management, which currently total $25 billion.
Also upon closing, BlackRock’s infrastructure investment platform will count over 80 employees, located in six offices globally, and manage more than $7 billion of invested and committed assets.

“The transaction is truly additive,” a spokesperson for BlackRock told Infrastructure Investor on Tuesday. “It brings to BlackRock a proven team with an extensive experience investing across a range of infrastructure project types in Mexico including transportation, energy and social infrastructure. The team has an established track record and has earned the position of market leader in infrastructure investing in Mexico.”

Infraestructura Institucional will become a part of BlackRock Infrastructure and integrate with the firm's existing Mexican platform, according to the spokesperson. Juan Alberto Leautaud, a principal of Infraestructura Institucional, will serve as head of Mexico Infrastructure. The team will report directly to Jim Barry, global head of BlackRock Infrastructure Investors Group, and locally to Samantha Ricciardi, country head of Mexico.

Carlos Alvarez, who recently joined BlackRock from Intergen, a Massachusetts-based power generation firm with offices in Mexico, will serve as one of four local managing directors on the Mexico infrastructure team, focusing on energy and power.

Infraestructura Institucional was launched in 2009 by the Black Creek Group, a Denver-based real estate company, driven by Mexico's National Infrastructure Development Plan and “laws that now allow Mexican pension funds to invest in private infrastructure funds and projects,” according to Black Creek’s website. The $1 billion I² currently manages is invested in two infrastructure-focused CKDs, BlackRock’s spokesperson said, referring to the Certificados de Capital de Desarrollo, or Structured Equity Securities, an investment structure introduced by Mexican regulators in August 2009.

According to Manuel Groenewold, a partner at White & Case, the main purpose of CKDs are to create sources of capital for Mexican companies and infrastructure or other projects located in Mexico, which in turn support economic growth.

Black Creek sold its controlling stake in I² in December 2012. It is unclear whether the Denver-based company, which did not respond to a request for comment, retains a minority interest in the firm.

BlackRock made its first investment in Mexican infrastructure this past March when it partnered with First Reserve, a Connecticut-based private equity firm focused exclusively on energy. The two firms acquired a 45 percent stake in the Los Ramones II projects, two natural gas pipelines belonging to a subsidiary of Mexico’s state-owned oil and gas company PEMEX, for approximately $900 million.