Automotive and auto parts sectors stand out in proximity investments in Mexico

The Head of the Ministry of Finance and Public Credit (SHCP), Rogelio Ramirez de la Opointed out that 54% of offshoring investment this year came from the automotive and auto parts sectors.

Since last year, but especially this year, they see signs of interest in Mexico to relocate companies, in what is called nearshoring, he said during his participation in the National Meeting of BBVA Mexico CEOs 2023.

So far, in 2023 alone, he said, investment announcements from 20 companies have been recorded for a total amount of $13 billion, of which 54% corresponds to the automotive sector and auto parts, where Tesla and BMW.

“I emphasize that the announcements underestimate the potential, either because many plans are unannounced and are in progress, and because the preliminary announcements do not include the full potential of the companies,” he pointed out. during his presentation “Economic prospects and new opportunities”.

In addition, he commented, the demand for industrial spaces is at record levels in the north of the country, with an occupancy rate exceeding 97% and with an increase in the area under construction of industrial spaces. greater than 100%, in cities like Guadalajara And Ciudad Juárez.

How is the Iberdrola contract going?

Asked about the amount of the Mexican government’s acquisition of 13 Iberdrola factories for $5.445 billion, which was announced in April last year, he said “this issue was anticipated in this bank”.

He explained that the way this acquisition was proposed, considering that the debt ceilings which are implicit and explicit must be respected, was only to make the disbursement for 51 percent, bringing it to the National Infrastructure Fund, confidence of which he is curator Banobrasand that it has the ability to take advantage of the remainder of the operation in the market.

In addition, he said, since the discount rate that these securities have on the market is relatively less attractive than that which this investment will have, there are already offers of bank credit to finance the initial disbursement. and strong demand is also expected for 49 percent stake which will come down in the market.

“So that’s the structure of the operation, it’s a pretty clean structure in the sense that it allows us to keep the budget balances and get into debt by committing only to 51% of value; but, in addition, we are compensated by a tax deduction when the sale is finalized,” said the former manager.

He clarified that, in the closing process, on which the company is currently working, a series of points considered in the negotiation are deactivated to facilitate a good agreement.

So, in the medium and long term, he says, this operation gives the Iberdrola company some content and the Mexican government an ingredient of good faith, what the Americans call Good willbut which has great value for corporate balance sheets.

“So that’s the objective, that’s the architecture of the transaction and that’s why we have taken this priority. The president considers it a priority for his government to complete this operation soon, (…) is a matter of weeks to sign,” said the country’s public finance official.

And then, he added, there will be a period during which the company will maintain operations, while the CFE will make its arrangements and really take over.

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