Pension Funds Looking At Mexican Energy Investments, But Few Pulling Trigger

Last August, Mexico passed a series of energy reforms, including opening the country’s energy sector to private investors.

Since then, North American pension funds, private equity firms and other investors have been looking hard at projects to invest in; but investors seem to be looking and not touching, according to Reuters.

From Reuters:

Almost a year after Mexico opened its energy market to private investors, North American firms are rushing south to decide which pipeline or power plant to invest in.

Enthusiasm is so high that some executives from big asset managers, pension funds and private equity firms complain of overbooked hotels in certain parts of Mexico City and business-class airplane cabins crowded with pitchbook-reading competitors.

So far, the potential investors are mainly looking, not buying, with actual investments in Mexican energy projects coming in more slowly than some expected.

[…]

Though the money tap could eventually open, given the promise afforded by Mexican natural gas, oil and renewable energy projects, some of the reluctance to ink deals may be laid to the peculiar risks of doing infrastructure-related business in Mexico.

Government bureaucracy, crime, challenging property rules and local opposition have delayed some projects and raised their costs, investors told Reuters.

The Mexican Energy Ministry initially predicted $62.5 billion worth of investments in the sector over the next three years from public and private parties.

But only $2 billion in deals have actually closed, according to Pitchbook.

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