LatAm’s next great infra play

Given the experience he gained in project finance and infrastructure over the course of a 15-year career, not to mention his knowledge of Latin America, Eduardo Ramos could have had his pick of where to relocate.

Twenty-twelve found Ramos in New York. His reason for calling the Big Apple home was practical: he was working as a managing director in project finance for Assured Guaranty Corporation. There, the long-time executive leveraged the Rolodex he’d built as a banker with Casa de Bolsa Banorte, where in 2004 he led a $200 million monetisation of the Monterrey-Cadereyta highway in Mexico.

Now, due for a job change, and keen to live someplace else, Ramos moved to Astris Finance, a boutique advisory firm, and prepared to leave New York. The question was: where to? Headquartered in Washington, D.C., Atris launched in 2000 as a subsidiary of financial services provider Dexia. By 2008, newly independent Astris had set up shop in Paris. 

Ramos, however, wasn’t interested in Europe. For one, he wanted a post in a growth market. He was also looking to work somewhere with a familiar feel.

“I came back,” Ramos, who was born in Mexico, says.

Today, while Astris is expanding into Brazil, Chile and Colombia, Ramos is emphatic that his birthplace is the premier infrastructure market in Latin America.

“Timing,” he stresses. “A lot of people following Latin America, who were focused on Brazil, are now asking: ‘What’s the next step?’”

Mark Ramsey wouldn’t disagree. Like Ramos, Ramsey, a layer from Australia and a long-serving Macquarie Group executive who’d moved to Africa to help Macquarie launch a fund there, was also looking to recharge his infrastructure career when he relocated to Mexico. There, Ramsey, as president and executive director of Macquarie Capital, Mexico, has witnessed “a little bit of the gloss come off” Brazil, and a change in attitude toward Mexico.

“Investing is a sentimental game,” opines Ramsey, who joined Macquarie, the Sydney-headquartered financial services concern, in 1997. “Brazil itself has benefited from sentiment. In the past, Mexico has been overshadowed by Brazil. To the extent people might not view Brazil as quite as good as before, Mexico has benefited.”

Ramsey has a point. While Brazil, as part of the ‘BRIC’ (Brazil, Russia, India and China) grouping, has hogged the spotlight for the better part of the past decade as the up-and-coming economic bulwark in Latin America, Mexico has been developing in its own right. The country has enjoyed 17 straight years of macroeconomic stability, demonstrating consistently low interest rates and decreased inflation, manageable debt and growth domestic product (GDP) growth.  

Ramos points to a “brighter macroeconomic outlook” for Mexico, “the second-largest economy in Latin America”. Ramsey, meanwhile, credits the country as the “largest Spanish-speaking [nation]…with a stable democratic government”. But ask them about their mutually-shared profession – investing private capital in public infrastructure – and you’ll hear a more bullish appraisal still.

“I continue to tell people what I’ve told them before: that Mexico is the most interesting market in Latin America,” said Ramsey. “I tell people to take Mexico seriously. This is their chance to get into the market.”


Mexico has been amenable to public-private infrastructure since the early 1990s. But that openness to privatisation suffered a blow in 1994 when the ‘Tequila crisis’ led to a rapid devaluation of the Mexican peso as well as wider economic upheaval in the Southern Cone.

By 2012, as Felipe Calderon concluded a successful second term as President, Mexico was well into its ambitious plan to accelerate investment in public infrastructure.  Under Calderon, Mexico rolled out its capital development certificate, or CKD security. The creation of the CKD allowed a pension fund in Mexico to channel $15 billion into the asset class. That January, the country passed a long-awaited public-private partnership (PPP; P3) law.

“The passing of the PPP law was definitely a vote of confidence; whether it was just that is too early to say,” Ramsey explains. “The expectation is that it will in due course lead to a smoother process in government procurement, and the infrastructure community is optimistic that law has given the federal government the way to streamline the process.”   

Ramos echoed Ramsey. “In talking to everyone, I would say the most important aspect of the P3 law is that there is now greater certainty in the procurement process,” he says.

Mexico closely duplicated the Private Finance Initiative (PFI) template pioneered in the UK. In banking, project finance became a bona-fide business.

Current President Enrique Pena Nieto, who followed Calderon, is similarly viewed as a boon for the asset class because of his pro-infrastructure agenda.

“A lot will depend on the attitude of the Pena Nieto administration,” says Ramsey. “But the indication so far is that the federal government is going to use everything it can to achieve as large a degree of infrastructure build as in the past – and it would be consistent with his successful approach to infrastructure when he was governor of Mexico state.”

Pena Nieto has been vocal in outlining his ambitious pro-infrastructure agenda. In his inaugural address, the President included improved infrastructure in a 13-point plan to improve Mexico. He also promoted the “Pact for Mexico,” which involved ending the state monopoly in petroleum and opening the industry to the private sector.

The Pena Nieto administration has also talked about revitalising its infrastructure platform to invest in energy infrastructure, in particular a multi-billion dollar gas pipeline upgrade, not to mention the highest-profile project: a potential P3 to design, build and finance an airport in Mexico City. 


“A lot of effort and thought has to be put into the area of social infrastructure,” says Ramsey. “There has to be a substantial programme of hospital building and prison construction.”

Banobras, the infrastructure development bank for Mexico, has been the prime mover for social infrastructure development, using Fonadin – the national infrastructure trust – to fund hospital and school construction. As far as debt financing goes, Mexico, in marked contrast to Europe, has been able to count on its commercial banks for lending.

Transportation infrastructure is also a priority. Rail and road work were put on hold while the Calderon administration wound down. For Ramsey, the much discussed Mexico City airport project – estimated to be a $5 billion deal – is a potentially transformative event for the Mexico P3 market.   

“The big ticket question is: what will the Pena Nieto administration do with the airport project?” Ramsey says.

Currently, Benito Juarez International Airport, the second busiest air field in Latin America, is “capacity constrained,” according to Ramsey, but can’t be expanded further. Ramos says a site for a new air field – located outside Mexico City – has been ascertained. 

“We will be looking closely at the Mexico City airport project in 2013,” Ramsey says of Macquarie.

Energy is the third leg in the would-be infrastructure build – and a lucrative possible market. Despite the need for capital to mobilise Mexico’s energy potential, Pemex, short for Petróleos Mexicanos, the state-run petroleum concern, is currently a dominant force, as is state-run power company Comision Federal de Electricidad (CFE).

“In energy, the driver is already in place for a continuation of very significant growth,” says Ramsey. “CFE and Pamex are looking to bring gas from the US from pipeline construction. CFE is facilitating new generation capacity. There is a serious energy deficit already, and it will get worse.  Exploration is a big likely area of new growth.”


While the outlook for Mexican infrastructure is positive, the ongoing Mexican drug war has been a glaring media maelstrom and a nationwide concern.

“It will spook a particular kind of investor,” says Ramsey, noting that drug-related violence has not impacted infrastructure work. “A corporate investor is going to keep investing.”

Despite the passage of a PPP law, local government might still struggle matching private capital to its public infrastructure.

“What is the danger?  The risk is always execution on a local level,” explains Ramsey. “That will be more difficult. Foreign capital will become impatient. It is, however, a very low risk country.”

Ramsey, whose tenure with Macquarie has given him a global perspective, found an apt comparison. 

“I liken Mexico to South Korea in the 1980s,” he said.  “That kind of growth is within their grasp.”

“All of the sudden, people have come to realise that Mexico has the opportunity,” Ramos said.