The Mexican Association of Private Equity and Venture Capital Funds (AMEXCAP) is a non-profit association. The Association currently represents more than 100 PE, VC, Real Estate, Infrastructure and Energy funds that actively invest in Mexico, and more than 40 advisory services institutions.
To promote the development of the Private Equity industry and of the Venture Capital ecosystem in Mexico.
“The private equity industry in Mexico has raised a sum of more than US $61 billion in the last twenty years.”
Mexico is more than its stunning landscapes, excellent cuisine, and vibrant culture; it is a great investment destination.
Amid these turbulent times, there are a number of reasons that are worth considering when it comes to doing business and diversifying investment portfolios in Mexico this year.
These can be grouped into the following categories:
In 1986, Mexico signed the General Agreement on Tariffs and Trade (GATT), and since then it has signed several Free Trade Agreements with 50 countries. This has helped transform Mexico’s economy to become one of the world’s top export powers of today.
Mexico shares its northern border with the United States, the world’s largest market, which extends for a length of 3,141 kilometers (1,952 mi). This proximity, along with the Free Trade Agreement, help explain why Mexico sells to the US more than Japan, Germany and South Korea combined1, which amounted to $361 Billion USD in 2019.
Mexico’s economy is placed 15th in the world, and 2nd largest in LATAM just after Brazil.According to certain projections2, Mexico is set to become one of the 7 largest global economies by 2050, bigger than Germany and the UK, thanks to its strong manufacturing industry and extensive foreign trade.
Mexico shines when it comes to international trade. It has signed 13 Free Trade Agreements covering 50 countries, which gives it access to more than 1 billion consumers throughout the world. In that sense, Mexico is an ideal export platform to access 60% of the world’s GDP.Nowadays, Mexico exports more than all other LATAM combined, including Brazil. In 2019, Mexico sold $480 Billion USD worth of goods to the world, making it the 9th top exporter worldwide.
Over the last 15 years, Mexico has further developed its manufacturing base and as a result has become a leader in many different sectors, including tech.
Mexico has a highly trained and specialized workforce and boasts the 8th best record for engineers graduating per year domestically.3
Mexico’s macroeconomic fundamentals are solid. In 2019, domestic inflation was less than 3%, and less than 3.15% in 2020. Also, the economic growth in the past 10 years has been 2.1% on average.The Governor (Alejandro Díaz de León) of the well reputed Central Bank, an institution that oversees all of the macroeconomic variables of the country and whose independent body gives security to investors and the economy in general, was just recently awarded “Governor of the year” by Central Banking.
Mexico is privileged with its geographical location and modern infrastructure. According to the WEF, Mexico is among the 30% of countries with the best transport infrastructure, with 172,000 km of roads, 27,000 km of railways, 117 ports, and 76 airports (64 international and 12 national).
There are at least three external reasons why it is wise to consider Mexico as a great investment destination in 2021, especially when compared with other emerging markets.
The US-Mexico-Canada Trade Agreement (USMCA), the replacement to the North American Free Trade Agreement (NAFTA), went into effect on July 1st, 2020. With this, the three countries are bringing their economic relations to the 21st Century.
The FTA now includes additional chapters that regulate trade in services (trade in goods was already tariff-free almost entirely) and other relevant trade disciplines, such as intellectual property.
The new chapter on digital trade contains the strongest provisions of any international agreement, supporting internet-enabled small businesses and e-commerce exports. For example, it prohibits customs duties on digital products distributed electronically (e-books, videos, music, software, games, etc.).6
The technological and commercial war between the United States and China has opened a window of opportunity for Mexico because it is driving and facilitating both the relocation and attraction of industries and powering the growth of existing industries on Mexico’s soil. Goods that used to come from China can now be provided by Mexico. This policy towards China, started by the Trump’s administration, is set to continue during the Biden presidency.
and several big, global players are already taking advantage of the myriad of opportunities that Mexico presents.
According to UNCTAD7, Global Value Chains are changing to become even more regional and this will be accelerated due to the Covid-19 pandemic. This is where Mexico’s strategic location plays a key role.
Chinese companies are seeking to increase the quantity of automotive parts they make in Mexico. Auto parts manufacturers that have already established operations here are:
Impro Precision, a Hong Kong-based manufacturer, announced in late 2020 that it is building a North American production based in the city of San Luis Potosí in central Mexico. Also, Taiwan-based electronics manufacturers Foxconn and Pegatron are among companies eyeing new factories in Mexico.
Recent investments have been announced in multiple sectors, such as the automotive, pharmaceutical, and aerospace.
Take a look at the 2021 Awards of the Private Equity industry in Mexico!
The industry has reached a good level of maturity: from 284 GP’s that have operated in Mexico, 103 GPs have raised more than one investment vehicle (over a third of GPs), and from those who have a fund operating (266 GP’s), 94 GP’s have more than one fund.
The ongoing creation of a broad base of early-stage companies to receive financing from late-stage funds.
An increasing base of potential medium-sized companies with broad financing needs.
Implementation of Best Practices in management and standard businesses that improve the performance of a company boosting its competitiveness within the economy.
Remarkable position for Mexico to take advantage of the geopolitical rift. Noting that Mexico is a manufacturer leader and top exporter, it has a strategic geographic location to produce for the USA, China, and Europe.
Infrastructure and Energy
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Exclusive for AMEXCAP members and LPs
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PE Overview 2019 Factsheet
AMEXCAP has different kind of members:
Private Equity funds of different investment strategies (Venture Capital, Corporate Venture Capital, Growth, Private Debt, Real Estate & Infrastructure and Energy).
Service providers: financial, legal, tax advisory firms, etc., that provide specialized services to Private Equity fund managers in Mexico.
Institutional investors or companies that invest in Private Equity (included but not limited to: Fund of Funds, Family Offices, Institutional Investors, Pension Funds & Insurance Companies).
The AMEXCAP Yearbook is a document that collects the most relevant information of Private Equity firms, Investors, advisory partners, and professionals in Private Equity Industry in Mexico. This document is exclusively for AMEXCAP members and LPs. In case you are an LP and are interested in receiving the Yearbook please contact us at firstname.lastname@example.org y/o email@example.com
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