Mexican Real Estate CCD Raises Funds

Artha Capital has raised MXP2.44bn from certificado de capital de desarrollo (CCD) investors, to support a private equity fund targeting urban infrastructure development in Mexico. The fund, which will reach MXP2.57bn once Artha’s own contribution is included, will develop basic infrastructure – roads, electricity and water – on 9 parcels of land in Mexico, before seeking to resell to commercial, residential or industrial real estate developers. “If you go to smaller cities and suburbs [of large cities], you’ll see that basic infrastructure is sorely lacking,” Carlos Gutierrez, founding partner of Artha tells LatinFinance. He adds that although many firms are good at building and selling real estate in Mexico, they are often inefficient in planning. Artha can aggregate the planning process to improve it, Gutierrez says. The fund will develop 9 large plots in different Mexican cities, each of 300-1,200 hectares, Gutierrez says. The 2020 CCDs priced at MXP100 each. They were distributed 57% to Afores and the rest to private pension funds, insurance companies, fund managers and government development bank Banobras, which took 19.5%. Investors will get 100% of their principal investment, plus a 12% preferred return, with additional proceeds going 80% to investors and 20% to Artha. Bank of America Merrill Lynch and Grupo Bursatil Mexicano managed the sale. Gutierrez notes that the deal took about 12 months from start to finish. Gutierrez, ex-LatAm chairman at Merrill Lynch, co-founded Artha last year with former Consorcio Ara CEO German Ahumada.