MEXICO - Economy
Partner, North America Transactional Group, Baker Mckenzie
Rodrigo Montemayor’s practice areas include corporate and commercial law, mergers and acquisitions, project finance, infrastructure, and real estate. He is also founder and chair of the general counsels’ committee at the Nuevo Leon chapter of the Mexican Bar Association, law professor, and former board member and General Counsel for Latin America.
The north of Mexico, in particular Monterrey, is an interesting place for investment, as the north is the cradle of the maquiladora industry in Mexico and has a privileged location from a logistics perspective to service the US as one of the world’s largest economies. It has a high level of sophistication in terms of the services it can provide to foreign investors. It also has some of the best universities in the Latin America and a highly qualified labor force, plenty of it multicultural and bilingual, and well accustomed to work with foreign companies, which is always important. The government has been extremely accommodating in receiving and helping foreign investment come to Monterrey. The local Ministry of Economy has a team of advisors that are highly skilled in helping foreign companies make a soft landing in the area. There is a great initiative called Invest Monterrey, an association created by the private and public sectors, as well as the academic institutions, dedicated to foster and facilitate investment in the city with the objective of positioning Monterrey as the best place to invest and do business in Mexico. It can help identify service providers, suppliers, places to settle, how to do their business, and even bring advisors in for them to facilitate the start-up process. The government and the private sector are extremely talented at that, making it a great place to explore investing.
It largely depends on the investor’s country of origin. Investors from countries that have historically done a great deal of business with Mexico know the business environment and are acquainted with its challenges and opportunities. There are other clients that are not too familiar with Mexico and that have never done business here, and the learning curve is greater for them. It is all a matter of getting to understand the environment, players, economy, and politics. Politics is an important aspect in this country, as is in other parts of Latin America as well. We excel in understanding the environment and the resources we need to allow our clients to be successful. We have a great network of offices that make it easy to attract investment in coordination with offices where our investor companies are doing business now.
We have clients that are sophisticated large Mexican conglomerates doing business internationally, in the US, Europe or Asia. Given our global presence with local roots, we are extremely well prepared and positioned to help those clients. Our network of offices is full service, and we have a strong M&A practice in financial centers and emerging markets that enables us to seamlessly coordinate complex cross-border transactions in combination with our global and local expertise. We are also seeing a greater than usual number of private equity funds, venture capital funds, and family offices showing interest on investing abroad. Those were perhaps not structured as formally as they are in the north now. We would typically see local families using their companies for investments, in some cases outside of their core business. With the introduction of family offices, their businesses are becoming more structured, which allows us to better assist them with their investments abroad.
Mexico is an extremely interesting place to invest in, since as a market and a place to manufacture has consistently been of interest among investors due to its proximity to the US and the USMCA, which has great benefits and puts Mexico with an incomparable competitive advantage vis-a-vis any other countries in Latin America in terms of where we are set in the region. The appetite for investment has not lost its pace and it will always be a great place to do business in. As mentioned before, we have seen a higher number of family offices interested on investing abroad, mainly in the US and Europe (including Spain).
The pandemic has completely shaken the world up, and not only in Mexico or the north. The key will be to overcome its effects, including from a macroeconomic standpoint, and help our clients emerge from the struggles of the pandemic. We have been fortunate to continue to see a high level of activity from our clients and support many investments. We still see activity on the M&A front, and there are still many companies interested in coming to Mexico, even though the pandemic has placed constraints on the financing end. We look at the north of Mexico from an economic and political standpoint. The elections for governor in 2021 will certainly have an influence on how things shape up in the coming years. We harbor many clusters for different industries, and the extent to which the government continues to incentivize and support those initiatives affects us. As mentioned above, one of our main objectives is to continue to position Monterrey as the best place to invest and do business in Mexico, part of which we intend to do as a Firm and as founding partners of Invest Monterrey. This is an effort to be on the radar of investors, showing an image to the world that we are all about receiving investments and treating companies well.
The effort that local businesses are putting into attracting investment is remarkable. Monterrey is extremely active through local government, global companies, its own labor force and industry clusters, with high quality of life. Based on the construction around Monterrey and the companies that are coming to establish their operations, a great deal has changed in five years. It is a prosperous region, and its proximity to the US is attractive; more importantly, however, is the historic investment made in education. Monterrey has some of the most important and prestigious universities in Mexico, if not Latin America. It is a great place to invest and do business in, and we are pleased to continue to promote that.
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