Is López Obrador a Threat to PE Energy Investments in Mexico?

WSJ Private Equity Pro

By Luis Garcia | 14 March 2018 | Read the full article at WSJ Private Equity Pro 

Private-equity firms poured billions of dollars in Mexican energy ventures in recent years. With left-leaning candidate Andrés Manuel López Obrador leading the polls for Mexico’s presidential election in July, should those firms be worried about his promise to shake up the country’s energy sector?

Mr. López Obrador plans to shift government spending toward oil refining and away from exploration to reduce the country’s dependence on U.S. gasoline, The Wall Street Journal reported this week. He also has promised to re-evaluate the energy reforms Mexico launched in 2013. The effort opened the industry to private and foreign capital, helping to spur a wave of private-equity investment in local energy businesses.

Disclosed private-capital investment in Mexico’s oil-and-gas sector totaled $1.1 billion from 2013 to 2017, compared with $161 million for the previous five-year period, before the energy reform effort was launched, according to Emerging Markets Private Equity Association, an industry trade group. Deal volume from 2013 to 2017 actually was higher because Empea’s data—which focuses on traditional blind-pool, direct-investment funds—didn’t include some of the larger deals made during that period, such as the $750 million and $500 million investments Partners Group led in Mexican pipeline builder and operator Fermaca Enterprises S de RL de CV in 2014 and 2015, respectively.

Read the full article at WSJ Private Equity Pro