Mexican lender raises $320m for private debt fund

A Mexico-focused project finance lender has raised Ps. $4 billion (€242 million; $320 million) from Mexican pensions and individuals for a first-of-its-kind listed debt fund for infrastructure.

The $320 million of net proceeds for the listed private debt fund, Fondo de Inversion en el Sector Energetico, will be co-invested with another $100 million from the lender, Mexico City-based Navix, for a total of $420 million.

The fundraising is the first use of a security called a certificado bursatile to raise money from pensions for a debt-focused fund in the Mexican market, according to a statement. The Mexican government created certificados bursatiles to give  local pensions an avenue to participate in private investment funds via a listed vehicle on the stock exchange.

“We saw it as the ideal vehicle for us to continue to extend credit,” Navix chief executive Gonzalo Gil White said in an interview.

Navix will use the money to underwrite energy infrastructure projects – such as oil tank construction, oil well drilling and pipeline construction – undertaken by local Mexican contractors.

Navix will extend loans ranging from Ps. 10 million, or $1 million, to Ps. 700 million, or a little more than $55 million, in the currency of the cash being generated by the project, Gil White said. Additionally, all the loans will come in the form of structured lending, meaning Navix will only extend credit where it can lay claim to a future stream of payments from a project.

“What we see through structured lending is the structure allows you to mitigate in many cases eliminate the risks involved with a credit transaction,” Gil White said.

For example, Navix pays the money directly to the company performing the work on the project, doesn’t allow the borrower to commingle its loan with other funds and ensures that a project-specific trust is responsible for collecting the money from the project– all measures focused on ensuring that the structured loans are repaid.

Navix has been active in the Mexican structured lending space since its founding in 2007 but Gil White and two other partners have been working in the sector since 1992 and have executed more than $10 billion of these types of transactions, according the statement.

Navix is backed by equity investors Eton Park Capital Management, Stark Investments, Axis Capital and Citigroup Global Markets Realty Corporation, according to the statement. The firm has 72 employees and offices in Mexico City, Poza Rica, Ciudad del Carmen and Villahermosa.