Mexico’s National Advisory Board to the Social Impact Investment

Taskforce

July 9th, 2015London, UK

2

Mexico: A Prominent Global Player

Sources: Mexico: Different Investment Lens Required, By Henry H. McVey, Head of Global Macro & Asset Allocation, And Vance Serchuk, Executive Director of the KKR Global Institute, 2014; UN statistics

Latin America’s second largest economy• US$ 1.18T in GDP• 120M population• US$ 9,800 GDP per capita• 3rd largest US trading partner, US$ 500B in 2013

Sound macroeconomic context• Fiscal deficit under control: -4%• Moderate debt to GDP ratio: 46%

‒ Well below Brazil, India, and the US • Strong fundamentals reflected in credit ratings and pricing

‒ BBB+ S&P rating‒ <100 5-year CDS Spread

• Boom in foreign investment since 2008-09 recession• Low inflation and a strong currency make Mexico a more

attractive foreign capital destination than many of its global peers• 1.4% inflation and currency risk• 2.1% country credit risk

3

However, highly contrasting development paces

Note: Gini index measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution. Sources: UN statistics, World Bank

High Human Development… … But High Inequality

0Perfect equality

100Perfect

inequality

India

China

United Kingdom

Turkey

United States

Mexico

Brazil

Colombia

0 10 20 30 40 50 60

33.6

37

38

40

41.1

48.1

52.7

53.5

GINI index

India

Colombia

China

Brazil

Mexico

Turkey

United Kingdom

United States

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

0.586

0.711

0.719

0.744

0.756

0.759

0.892

0.914

Human Development Index

Very High

High

MediumLow

4

Great Opportunities Lay Ahead

McKinsey has called Mexico a two-speed economy moving in opposite directions• A highly productive modern economy that is flourishing and competing globally• A traditional, often informal economy where productivity is plunging

Great gaps in basic social services represent market opportunity for social enterprises…• Health, education, affordable housing, financial inclusion, access to water, among others

… As well as opportunities in urban and environmental development• According to the World Bank, Mexico has a challenge to make urban development more

environment-friendly, efficient and resilient to climate change, as well as socially inclusive

Overall, positive macroeconomic outlook• Structural reforms could increase GDP growth from 2.8% to 4.5%• Working population will peak in 2042• Geographic and economic diversity

Sources: Mexico: Different Investment Lens Required, By Henry H. McVey, Head of Global Macro & Asset Allocation, And Vance Serchuk, Executive Director of the KKR Global Institute, 2014; UN statistics; A tale of two Mexicos: Growth and prosperity in a two-speed economy, McKinsey Global Institute, 2014; UNDP statistics; World Bank

5

Flourishing Impact Investment Ecosystem

Out of US$ 10.6B capital committed to impact investment globally, approx. 11% or US$ 1.2B has been committed to Latin America• After Brazil, Mexico has captured the largest amount, south of US$ 300M

Impact investing in Latin America is still in early stages, or “Marketplace Building” phase• Fast growth of industry players, hubs of activity begin to develop, supporting institutions

form, higher competition• Main hubs of activity are Sao Paulo, Mexico City and Bogota

Burgeoning ecosystem includes a range of local and international funds focused on a variety of sectors• Most popular topics include housing, education, agriculture, financial inclusion, health,

sustainability, entrepreneurship, among others

Range of challenges remain a focus of regional players• Sourcing investment opportunities, difficulty in measuring impact, finding suitable exit

opportunities, lack of supporting institutions

Sources: Eyes on the Horizon, The Impact Investor Survey, GIIN and JP Morgan, 2015; State of Impact Investing in Latin America, Bain & Company, 2014

6

Mexico – An Active Player

A robust Mexican ecosystem built over the last 5 years supporting impact investment initiatives• Over 514 organizations identified involved in impact investment initiatives, including

– 25 funding organizations– 31 accelerators and incubators– 22 corporations– 10 government agencies– 13 foundations– 17 universities and research centers– 29 consultants and other service providers

Latin American Impact Investing Forum based in Mexico has become the most important gathering in the region• Over 420 attendees representing funds, foundations, entrepreneurs, accelerators,

consultants, NGOs, corporations, government agencies, multilateral organizations, academics, investors, among others

• 24 countries represented from Latin America, North America, the European Union, Asia and Africa

Sources: Eyes on the Horizon, The Impact Investor Survey, GIIN and JP Morgan, 2015; State of Impact Investing in Latin America, Bain & Company, 2014; GIIMAP – Mexican Impact Investment Sector Mapping, 2013

7

Mexico’s National Advisory Board to the Social Impact Investment Taskforce Members

Rodrigo Villar• Founder and CEO at New Ventures• President of Mexico’s Advisory Board• Represents most important platform that

catalyses impact entrepreneurs

Juan Sandoval• Managing Director Venture Capital Fund

at Nacional Monte de Piedad• Represents country’s largest foundation and

its impact fund

Francisco Martínez• Environmental Sustainability Officer, FEMSA• Represents one of largest bottler franchises

of Coca-Cola products in the world and fosters its development initiatives

Katia Dumont• Mexico and Central America’s Chapter

Manager at The Aspen Network of Development Entrepreneurs (ANDE)

• Coordinates member initiatives

Fulvia Morales• Fomento Social Banamex (Citibank)• Represents the foundation of one of the

country’s largest banks and fosters its impact initiatives

Miguel Laporta• Head of Corporate Sustainability at HSBC

Mexico and Latin America• Leads one of the country’s largest banks

impact initiatives

Juan Carlos Domenzain• Co-Founder and CEO at Promotora Social

México• Represents pioneer risk philanthropy

organization

8

Simple But Ambitious Two-fold Agenda

1. Strengthen the impact investment ecosystem• Continue to actively engage new

players2. Promote the impact investment ecosystem

• Disseminate content and educate relevant players and organisations

3. Influence public policy• Foster dialogue between public,

private and civil sector organisations

Domestic Agenda Internal Agenda

1. Internalise the key ideas surrounding impact investment• Share, adapt and implement ideas

discussed at the Global Steering Committee

2. Share best practices with the international community• Put forward the Mexican case, using

insights and best practices learnt to foster collaboration among countries

9

Thank you