Two infra funds raise $305m from Mexican listings

Marhnos, a Mexican developer, raised an $82m infrastructure fund through an offering of ‘certificados de capital de desarrollo’. I Cuadrada, a Mexican infrastructure fund affiliated with US private equity firm Black Creek Group, garnered $223m.

Two infrastructure funds raised Ps$3.7 billion (€234.5 million; $305.4 million) last month to target environmental, social infrastructure and road projects in Mexico.

The funds were raised primarily through Mexican pension funds, which have been buying stakes in private equity, real estate and infrastructure funds via securities called certificados de capital de desarrollo, or CKDs. Pensions have put $3 billion into these securities since the first such offering in July 2008, according to the Mexican National Commission for the Pension System.

Marhnos, a Mexican developer, raised an $82 million infrastructure fund at the end of December through an offering of CKDs. Pensions acquired 70 percent of these securities and Marhnos the remaining 30 percent, according to José Manuel Fortes, head of Marhnos’s infrastructure division. 

The Marhnos fund has an investment period of four years, and it will invest in around eight to ten projects, Fortes said. He added that the fund will focus on public-private partnerships, toll roads, and environmental projects such as wastewater treatment plants. 

Marhnos has already secured a contract for a regional public-private partnership. The International Finance Corporation, the private investment arm of the World Bank, structured the contract to construct a hospital for the Social Security Institute of the State of Mexico.  Fortes said the project involves the construction of a 120-bed hospital and is backed by a 25-year concession – two years for construction and 23 years for maintenance and operations. He added that the total investment cost for the project is Ps.$1 billion, of which 20 percent would be equity.

Fortes said that pensions, called AFORES, had raised concerns about a potential conflict of interest in having the developer also be a fund manager. He said that the AFORES were worried that Marhnos was “looking for the fund to get more construction work”, which he said was not the case. He said that the CKDs enabled them to have pension funds as co-investors in the projects and allowed Marhnos to invest in bigger projects. 

Another fund, I Cuadrada (“I squared” in English, shorthand for Infraestructura Institucional) is affiliated with Denver-based private equity firm Black Creek Group and its Mexico Retail Properties (MRP) unit. MRP acquires and develops net-lease properties to large retailers such as Walmart, Home Depot and Costco, according to MRP’s website.

Mexico City-based I Cuadrada raised $223 million in the offering of certificados last month, and Mexican pensions accounted for 83 percent of that offering, according to the Mexican National Commission for the Pension System. José María Zertuche, vice-president for finance and investments at the fund, said FONADIN, Mexico’s national infrastructure fund, and “a couple of other investors” had acquired the remaining share of the certificados.

Zertuche said the fund has a five-year investment period and that he expected investments in about nine to 12 projects. He said their focus would include both existing and new construction in transportation, drinking water, wastewater and social infrastructure projects.