INCREASING EXPOSURE

Mexico 2016 | ECONOMY | INTERVIEW

TBY talks to Alejandro Díaz de León Carrillo, CEO of Bancomext, on Mexico's trading partner, private investors, and providing financial services to the sectors most in need.

Alejandro Díaz de León Carrillo
BIOGRAPHY
Since November 2015, Alejandro Díaz de León Carrillo has been CEO of Bancomext. From January 2011 to November 2015, he served as Head of the Unit of Public Credit. Previously, from August 2007 to January 2011, he was responsible for creating and leading the National Pension Fund for State Workers (PENSIONISSSTE). Prior to PENSIONISSSTE, he worked for 16 years at the Bank of Mexico (Banxico), an entity that he left as Director of Economic Studies. Carrillo has a master’s in public and private management from Yale University and earned a BA in economics from the Autonomous Technological Institute of Mexico (ITAM).

What is the importance of Bancomext for Mexico?

Over the last 20 years, Mexico has changed the scope and scale of its involvement with the global economy. The country has taken the decision to switch from being a relatively closed economy to an open one. NAFTA changed significantly the way we interact economically with the world and the type of trade we do. Within the context of this transformation, Bancomext plays a key role. We are a development bank that has been involved in Mexico's international trade for a long time with different priorities. We will celebrate 80 years in 2017, and during the last 25 years, our focus has been how we can foster more international links with our main trading partners. As a result, today Mexico has FTAs with more than 40 countries due to an open and integrated economy with trade and financial flows. On that regard, Bancomext plays a key role financing Mexican companies that export goods and services around the world. We support different companies from many sectors to help them meet their financial needs, boost their businesses, capacity and investment in general. This is our main mandate to support different sectors and provide financial services to meet the needs of those sectors.

What is the biggest challenge for Bancomext in fulfilling that role?

To provide some perspective, over the last 40 years, there have been two significant changes to the structure of the Mexican economy. The first was with the FTAs and consolidating macroeconomics that followed in the early 1990s while the second was the structural reforms that have been approved in the last three years. Together, these two transformations play an important role in different sectors and projects. We want to make the most out of these reforms and the FTAs that we have with more than 40 countries. We have prioritized seven key sectors: energy, tourism, manufacturing, logistics, electronics, automotive, and mining. Bancomext has been operating under two types of financial services: direct lending, and second-tier lending. For larger projects, we directly manage the financials. Bancomext plays an important role in the implementation of the structural reforms. For example, energy has been the fastest growing component in our portfolio. We support different sectors such as electronic, hydrocarbons, upstream, and downstream, for example. We have also focused on renewables projects. We have been financing many photo-voltaic and wind farms. There is a great deal of potential in Mexico for such energy projects and Bancomext plays an active role, making the most of the reforms.

What level of interest in Mexico have you seen from international private equity investors?

In terms of overall investment, it was more fixed-income products in the past, but the way forward is more equity investment. This change is clearly a result of the reforms which are opening new projects, sectors, and business opportunities. The combination of the old reforms with the FTAs with the new reforms in energy and services provides a great opportunity for investment. Some places have also become volatile; however, Mexico is perceived as an economy with strong fundamentals, good management, and huge potential with our openness and our strategy. We see substantial interest from private equity companies from the US, Canada, and even the Middle East. They have already invested in tourism and want to increase their exposure in that sector. This is an opportunity for equity-type investment. We want to take a step further. Bancomext announced it will play a larger role in terms of bridging the financing gap between institutional investors and the pipeline of potential projects. We will put together an effort to provide more information about greenfield and brownfield projects, trying to make it easier to search for great investment opportunities. We know that different investors have different risk appetites and we need to bridge that gap better.