Business
BlackRock said on Friday it will buy the Mexican infrastructure investment firm Infraestructura Institucional. Terms of the deal weren’t provided, reports Bloomberg. Infraestructura Institucional oversees about $1 billion of invested and committed capital, New York-based BlackRock said Friday in a statement. The purchase will bring assets in BlackRock’s global infrastructure platform to more than $7 billion. The firm’s Mexico office will grow to more than 50 employees and $26 billion of assets under management. “This is the most material demonstration of our commitment to infrastructure in Mexico,” Jim Barry, the global head of BlackRock’s infrastructure investment group, said in a telephone interview.
BlackRock, led by Chief Executive Officer Laurence D. Fink, is expanding offerings targeting infrastructure projects such as roads and bridges as it seeks alternatives to traditional bond investments, whose returns have been eroded by years of near-zero interest rates. Earlier this year, it agreed to buy a stake in two natural gas pipelines owned by state oil company Petroleos Mexicanos in a joint deal with First Reserve Corp. Mexican President Enrique Pena Nieto enacted widespread energy industry changes in 2013, 75 years after the country’s oil and gas business was nationalized. The government projects that opening up the industry will generate $62.5 billion in investments by 2018. The deal announced today is subject to regulatory approvals and is expected to close by the end of 2015. The financial impact of the transaction is not material to BlackRock earnings per share.
Two of the six projects listed in Infraestructura Institucional's most recent quarterly filing were built by companies owned by contractor Juan Armando Hinojosa, writes Reuters. Mexico's federal auditor is investigating contracts held by Hinojosa after news of real estate deals he made with political figures sparked national outrage last year. Local media reported that he sold a luxury home in Mexico City to the first lady, and the Wall Street Journal reported that he sold a house to Finance Minister Luis Videgaray at a below-market interest rate.
His companies have won millions of dollars worth of public contracts during Pena Nieto's 2005-2011 governorship of the State of Mexico and his presidency. One of the companies was part of a Chinese-led consortium awarded a multibillion-dollar high-speed train contract last year. That contract was later nixed, days before news of the real estate deal with the first lady. The two Infraestructura Institucional projects with Hinojosa represent around 16 percent of total assets held in the fund's two investment vehicles, including long-term accounts receivable and investments in joint ventures. When including all committed capital to the fund, it represents 9 percent of the total.
