To get a sense of the excitement surrounding the opportunity now presented by Mexican energy, have a conversation with one of the few people to have actually completed a private equity deal in the space.
Consider, for example, a story told by George Osorio, managing partner of Conduit Capital Partners, an energy-specialist private equity firm that completed a hydroelectric investment in Mexico in 2002. The difficulty of that project convinced Osorio that investments in Mexico would always be characterized by complexity and pain. He relates encounters he had in the early 2000s with Mexican regulatory officials: “We would have discussions with (government regulatory entities) CRE and CFE…and we were trying to start the conversation about opening up the sector, opening it up for private investment and potentially privatization. We would literally be laughed at. They said that would never happen in Mexico: ‘It’s too nationalistic. This is part of our national resource, and we don’t intend to ever open it up.’ Fifteen years later, look where we are—it’s happening.”
What is happening in Mexico should indeed be energizing to private investors around the world, as well as to domestic advocates for Mexican growth. Most discussed are the amendments to the Mexican Constitution enacted by lawmakers late in 2013 that create several models for foreign investment in Mexican hydrocarbon. But Mexico’s domestic economy is growing such that demand for energy from across the border will also spell investment opportunity.