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  • February 2019 (Revised March 2019)
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Banorte and the Capital Call Facility: Infrastructure Finance in Mexico

By: John D. Macomber, Carla Larangeira and Fernanda Miguel
  • Format:Print
  • | Language:English
  • | Pages:22
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Abstract

As a result of Mexico´s pension industry deregulation, pension funds were able to invest in energy and infrastructure projects through a variety of financial instruments, particularly through Capital Development Certificates (CKDs), an asset class that served as a vehicle for investing in unlisted companies. By the end of 2017, pension funds had invested more than $16 billion in infrastructure, with CKDs as the primary investment vehicle for this sector. Motivated by increased domestic liquidity and opportunities for investment, Rodrigo Jair launched Jair Infrastructure Investments, a specialized fund with the majority of its capital raised from pension funds. Jair was approached by Felipe Duarte, head of Banorte´s Infrastructure and Energy Group, who offered him a short-term credit line to increase the fund´s liquidity during its investment phase. Jair had to decide whether he should deploy this line or rely exclusively on capital calls from his investors to fund his pipeline. Was it worth paying the commitment fees to achieve increased liquidity? What risks should he consider when making this decision? What are the upsides and downsides of relying on equity or debt for a fund like Jair Infrastructure Investments? Will techniques like this bring significantly more capital into infrastructure investing?

Keywords

Financial Products; Fund Management; Capital Call Facility; Pension Funds; Infrastructure; Energy; Finance; Decision Making; Investment Funds; Financial Instruments; North America; Mexico

Citation

Macomber, John D., Carla Larangeira, and Fernanda Miguel. "Banorte and the Capital Call Facility: Infrastructure Finance in Mexico." Harvard Business School Case 219-049, February 2019. (Revised March 2019.)
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About The Author

John D. Macomber

Finance
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Related Work

    • February 2019 (Revised March 2019)
    • Faculty Research

    Banorte and the Capital Call Facility: Infrastructure Finance in Mexico

    By: John D. Macomber, Carla Larangeira and Fernanda Miguel
Related Work
  • Banorte and the Capital Call Facility: Infrastructure Finance in Mexico By: John D. Macomber, Carla Larangeira and Fernanda Miguel
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