TUXTLA GUITIEREZ, MEXICO, Feb. 17—The
International Finance Corporation today signed investment agreements for
its US$5 million commitment to Fondo Chiapas, a for-profit investment fund
targeting opportunities in Mexico's southernmost state. The IFC financing
is part of a capital increase that will double the fund's resources for
investing in local small and medium enterprises, leading over time to considerable
job creation, new technology, skills enhancement, and other economic benefits
in one of Mexico's poorest areas.
Income levels in Chiapas are less than half the Mexican national average,
with health and education levels also far lower than those of the rest
of the country. Fondo Chiapas began in late 1994, seeking to combat the
state's chronic poverty by attracting new private capital to develop its
largely untapped potential in agribusiness, aquaculture, tourism, light
manufacturing and other industries. It was designed as a public/private
partnership bringing together resources from the Mexican government, the
local business community, and Mexico City business leaders.
Initially capitalized at US$2.3 million-equivalent, the privately managed
fund has to date made four investments: in a local export promotion company;
the conversion of ranchland into a rubber plantation; a plant that buys
cashews from local campesinos and processes them for sale nationwide; and
the state's first commercial shrimp hatchery. The fund's promotional activity
has also led to private investors' reactivation of a large-scale tuna processing
plant that had long been closed.
"Despite its less-developed status, Chiapas is rich in natural resources,
labor, climatic conditions and tourist attractions," said IFC Latin
America and the Caribbean Director Karl Voltaire. "We are glad to
support this innovative local initiative. It makes an important contribution
to development by providing early-stage equity capital for projects sponsored
by skilled entrepreneurs able to build businesses out of the state's natural
"IFC is an essential partner in Fondo Chiapas, and we look forward
to continued close collaboration in the years ahead," said the fund's
chairman, Enrique Molina, CEO of Grupo Industrial Escorpion S.A. de C.V.
in Mexico City. "We have an extensive pipeline of new investments
planned that should help raise standards of living and increase private
sector development in Chiapas."
IFC has been working with Fondo Chiapas since 1996, sharing its global
expertise in project appraisal, fund structure and governance, and environmental
impact assessment from work with numerous other investment funds in developing
countries. The Corporation has also used grant resources from its trust
fund with the Canadian International Development Agency to carry out a
study of the investment potential and environmental issues of the local
shrimp industry. This study has already led to an investment by Fondo Chiapas.
The US$5 million investment that IFC announced today is being matched by
existing Fondo Chiapas shareholders as well as new investors that IFC attracted
into the fund such as Grupo Minsa, Grupo Maseca and Grupo Financiero Bital.
The capital increase will provide Fondo Chiapas with more than US$12 million
to invest in local small and medium size enterprises over the next 10 years.
Individual investments are expected to be in the US$400,000 to US$3 million
range, with returns produced by the eventual sale of equity stakes to other
strategic investors or in the Mexican capital markets.
IFC, a member of the World Bank Group, is the world's largest multilateral
source of equity and loan financing for private sector projects in developing