The Overseas Private Investment Corporation (Opic) has committed more than US$40mn in financing to eight US small businesses since opening its programmes in Mexico last year and anticipates providing hundreds of millions more in the upcoming months, as American companies realise the potential return on investments in America’s second largest trading partner.


At the US-Mexico Bilateral Commission on November 9, the Partnership for Prosperity (P4P) Principals announced Opic’s latest project in Mexico, a US$20mn loan to a US small business for the leasing of state-of-the-art information technology equipment to Mexican companies, making equipment upgrades more affordable to Mexican customers and opening a new market for US firms.



The project is Opic’s largest in Mexico to date.


The P4P Principals in Mexico and Opic President and CEO Peter Watson in Washington DC simultaneously announced that Opic expects to establish a facility to support loans to small and medium-sized enterprises in several sectors, and another facility to support investment in energy infrastructure. Combined Opic financing for the two facilities could reach US$450mn.


Opic has also issued a call for proposals for management of a new private equity investment fund in Mexico, to which the agency will provide US$120mn; total capitalisation of the fund is expected to reach US$400mn. Mexican companies also stand to benefit from another Opic investment fund targeting Latin America’s power sector, to which Opic will contribute US$40mn. At the same time, Opic has committed US$90mn toward the establishment of two investment funds with a focus on Latin America. Each will devote 40% of its portfolio to Mexico.


Opic is also in negotiations with the University of Guadalajara to support creation of a technology and research park at the university that would enable Guadalajara to evolve from a purely out-sourcing center to a research and development hub, and is also working with several investment banks to evaluate a variety of potential infrastructure and housing projects that could benefit from Opic’s non-honouring of a sovereign guarantee insurance coverage.


Under the auspices of the US-Mexico Partnership for Prosperity, the US and Mexico signed an agreement last year, which, for the first time, enables Opic to provide investment support for private sector projects.


The Mexican Senate ratified the agreement in April 2004. Alan Larson, under secretary of state for economic and business affairs, a P4P Principal, says, “Our objective in the P4P is to promote development, create jobs, and provide fertile ground for joint economic and social responsibility.  P4P is delighted to see that the Opic agreement has so quickly been transformed into concrete projects which address these objectives.”


“Opic has increased dramatically its support for US investment in Mexico, as American companies see first-hand the positive returns that potentially await them there,” Watson adds. “The broad range of projects – from housing and franchising to microfinance and infrastructure – indicate that Partnership for Prosperity is developing as expected. Opic will continue to work diligently to maximise its Mexican portfolio, which in turn will stimulate additional economic activity throughout the country.”


Watson says Opic’s portfolio of support for US small businesses in Mexico covered sectors ranging from micro financing and franchising to agribusiness and low-income housing. Projects include:


  •    A US small business using a US$3.3mn Opic loan to produce vegetables during the winter growing season in Yucatan for distribution in US markets.


  •    Another US small business using a US$10mn Opic loan to expand its production of prefabricated homes in Mexico, helping the country meet a growing demand for low-income housing. Homes will be sold to low-income buyers through Mexico’s Infonavit programme, similar to Fannie Mae in the US.


  •    A US$1.2mn Opic loan to a US franchisee of Wendy’s International, enabling the company to establish up to three Wendy’s fast food restaurants in Mexico – Opic’s first franchise project in the country.


The US-Mexico  Partnership for Prosperity is a unique public-private partnership initiated by President George Bush and President Vincente Fox in September 2001 to spur economic growth and bring development to those regions which have benefited less from Nafta. P4P uses existing resources to engage the business community, state and local governments and academia in new cooperative ventures.



P4P initiatives include projects which reduce the cost of remittances, expand Mexico’s housing pool, extend credit to small and medium-sized enterprises, establish university linkages, offer marketing opportunities for indigenous handicrafts and provide training and expertise.