Venture Capital Funds in Mexico Ask for Reforms
06/09/2005
Author:
Latin American Venture Capital Association
Chicago, IL
United States
www.lavca.org | Categories:
Industry Regulation
Private Equity
Venture Capital |
Article:
For Immediate Release
Contacts:
For LAVCA: Ramona DeNies, rdenies@lavca.org
For AMEXCAP: Luis Antonio Márquez Heine, lmarquez@amexcap.com
MEXICAN FUND MANAGERS PRESS GOVERNMENT FOR NEEDED REFORMS
GOVERNMENT URGED TO IMPROVE MEXICO’S LEGAL FRAMEWORK FOR VENTURE CAPITAL
Mexico City June 9, 2005 – Fund managers, service providers and government representatives met recently for a frank and open dialogue at a Policy Roundtable on the Regulatory Framework for Venture Capital in Mexico. The dialogue centered on the implications of the new Capital Markets Law currently under debate in the Mexican House of Representatives. Participants discussed the implications of the law in facilitating greater investment but also emphasized that the new Law solved just part of the problem and analyzed what could be done.
The event, held June 9th at the Club de Industriales in Polanco, was presented by the Latin American Venture Capital Association (LAVCA) and the Mexican Private Equity Association (AMEXCAP) in collaboration with Mexican development finance agency Nacional Financiera (NAFIN) and the Multilateral Investment Fund (MIF) of the Inter-American Development Bank.
"The event was an opportunity for the Mexican government to hear directly from the private sector what reforms are required to promote the industry and increase the amount of investment in Mexican companies," said Antonio Ruiz Galindo, President of AMEXCAP. "We hope that this discussion helps lead to concrete actions to improve the regulatory environment in Mexico.”
The objective of the Roundtable was to create dialogue between the public and private sector on themes fundamental to developing the venture capital industry in Mexico. Venture capital has proven to be an important vehicle for economic growth and job creation in nations throughout the world, although the industry in Mexico has not had the anticipated impact due to various legal restrictions.
"In the last ten years Mexico has received just 10% of the equity capital invested in Latin America," said LAVCA Executive Director Christina Kappaz. “It is necessary to resolve these issues to attract more investors and facilitate investment in Mexico’s smallest businesses.”
The roundtable featured speakers Mr. Ruiz Galindo, Alonso García Tames, Undersecretary of Finance and Public Credit, Mauricio Basíla Vega, Vicepresident of the Securities and Exchange Commission, Federico Patiño, Deputy Manager of Investments, Nacional Financiera, and Luis Harvey, Managing Principal, Nexxus Capital.
More than 50 invitees participated in an open dialogue with the roundtable’s speakers, principally questioning Undersecretary Garcia and Mr. Basila on the government’s current willingness to make the reforms necessary to growing the industry in Mexico. Participants emphasized two points: (1) that Mexico cannot compete for investment if the rules for the venture capital and private equity industry are not in line with international best practices, and (2) that the high transaction costs involved in overcoming current investment barriers in Mexico inhibit funds’ ability to invest in small- and medium-sized companies.
- The principal themes discussed in the Policy Roundtable included changes in corporate governance under the new capital markets law, the need for an appropriate local vehicle for venture capital funds, and the creation of a national fund-of-funds, as well as the fiscal treatment of International funds, the participation of Mexican institutional investors, and tax incentives to encourage industry development.
Read the Event Proceedings for details on the reforms the private sector asked of the Mexican government.
About LAVCA
LAVCA's mission is to promote the growth of the venture capital and private equity industry in Latin America through research, education, networking, best practices, and the advocacy of sound public policy. For more information on LAVCA, a not-for-profit trade association, please visit www.lavca.org.
About AMEXCAP
AMEXCAP was created to promote and develop the market for private equity funds in Mexico through research, education, networking and best practices, and to become the voice of private equity and venture capital industry with Mexican authorities. For more information on AMEXCAP and its activities please visit www.amexcap.com.