Press Release

Tuesday, February 22, 2005

$570 Million in New Investment Significantly Increases OPIC Support in Mexico

Mobilizing private sector investment supports goals of the U.S. Mexico Partnership for Prosperity

WASHINGTON, D.C. – The Overseas Private Investment Corporation (OPIC) increased its support for U.S. investment in Mexico more than ten-fold when its board of directors approved $570 million in OPIC financing for four new projects in the country, setting the stage for even more U.S. investment under the auspices of the U.S.-Mexico Partnership for Prosperity.

Under the auspices of the U.S.-Mexico Partnership for Prosperity, the U.S. and Mexico signed an agreement in 2003, which, for the first time, enabled OPIC to provide investment support for private sector projects. The Mexican Senate ratified the agreement in April 2004.

The board first approved a $200 million guaranty framework agreement by which OPIC will share credit risk with Citigroup subsidiary Banamex, S.A. in downstream project loans in Mexico. Specifically, the facility will focus on middle market lending, corporate lending and the microfinance sector. This is the first OPIC credit risk-sharing program in Mexico.

Next, the board approved up to $250 million in OPIC financing for the Mexican affiliate of a U.S. company to finance its working capital needs and issue letters of credit when it builds energy infrastructure projects in Mexico.

The OPIC financing will guaranty a credit facility that will be provided by commercial banks to ICA-Fluor. ICA-Fluor is a Mexican joint-venture company that provides engineering, procurement and construction services in the energy sector.

Finally, the board approved up to $120 million in OPIC financing for two new private equity investment funds intended to support sectors of the Mexican economy vital to its continued growth: power generation with a focus on renewable energy, and those benefiting from the country’s growing purchasing power.

The board approved up to $60 million in OPIC financing for the establishment of the Baring Mexico Private Equity Fund II, with a target capitalization between $150 and $200 million. The fund will invest in a diversified portfolio of medium-sized companies operating in Mexico, particularly in sectors expected to benefit from the increasing domestic purchasing power and relatively young Mexican population, including consumer goods, financial services, housing, healthcare and entertainment.

OPIC selected Baring Latin America Partners LLC (BLAP) as investment manager of the fund. BLAP is currently serving as manager of two other OPIC-supported funds, one in Latin America and one in Africa.

The board also approved up to $60 million in OPIC financing for Conduit Capital Partner LLC’s third Latin American fund. The fund will invest in independent power projects (IPPs) in Latin America and the Caribbean, with a focus on renewable energy and Mexico. The IPPs will consist primarily of electric power-generating facilities and follow one of three strategies: greenfield construction, development equity or acquisitions requiring expansion capital. The fund has a target capitalization of $200 million.

“Board approval of these four projects in Mexico represents an exponential leap in OPIC support for U.S. investment in the country, reflecting both rapidly growing investor interest in Mexico and a milestone for the Partnership for Prosperity undertaken by presidents Bush and Fox in 2001,” said OPIC President and CEO Dr. Peter Watson, who noted that as of the end of the last fiscal year, OPIC had provided $41 million in financing to 11 projects in Mexico. “It also represents remarkable progress made by OPIC in Mexico since a bilateral agreement between the two countries opened OPIC programs there in 2003.”

“These new projects specifically target sectors that drive the Mexican economy – the nascent purchasing power of its youngest generation, and energy infrastructure – and with their success will encourage even greater levels of American investment in the country,” he added.

The U.S.-Mexico Partnership for Prosperity (P4P) 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.