May 22, 2019 / 8:10 PM / 4 months ago

REFILE-Colony Capital's LatAm arm plans $5 bln investment, targeting Mexico

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By Daina Beth Solomon

MEXICO CITY, May 22 (Reuters) - Private equity firm Colony Latam Partners, part of Los Angeles-based investment group Colony Capital Inc, will invest up to $5 billion in Mexico, Chile, Colombia and Peru over the next several years, executives said on Wednesday.

In a bid to seize opportunities despite what it described as an unclear political climate, Colony Latam plans to devote more than half its funding to Mexico, focusing on real estate, clean energy and credit financing.

Thomas Barrack, chief executive officer of Colony Capital, said the venture aims to take advantage of local investor unease at a time when Mexico is implementing untested policies, and the United States-Mexico-Canada trade deal (USCMA) has yet to be ratified.

"When the domestic environment is not so optimistic, it's a good time to see if we can participate," Barrack said at a press briefing. "Confusion and lack of stable footing present opportunities."

Mexican President Andres Manuel Lopez Obrador, who took office in December, rattled financial markets and investor confidence by canceling a partly built airport and putting the brakes on a landmark liberalization of the energy industry.

Banks have cut their growth projections for Mexico, while state oil company Pemex struggles to lighten its debt burden under threat of losing investment-grade status.

Lopez Obrador has said Mexico's economy is healthy and will grow faster than forecast. He recently pointed to an increase in foreign direct investment as a sign of confidence.

Barrack said Lopez Obrador was similar to U.S. President Donald Trump in his ability to tap into voter frustration over traditional politics.

He said tensions between the leaders over migration would ease after USCMA is ratified. Trump has blamed Mexico for migrant flows and called for a border wall.

"The word 'wall' is not something any of us want to use when we're trying to build alliances with one of the most important countries that we have," Barrack said.

The U.S. trade war with China has underlined the importance of trade within the Americas, Barrack added.

"If you look at new mantra of America's point of view - of not just making America great but making the Americas great - that's probably a timely position to take with regards to what's happening in China," he said.

U.S. government statistics show that Mexico has leapfrogged China to become the No. 1 U.S. trade partner since the spat with Beijing intensified.

Colony Capital created Colony Latam out of its recent acquisition of Dubai-based Abraaj Group's private equity business, which managed $700 million in assets in the Pacific Alliance trade bloc.

In the next three to four years, the company said it plans to devote $1 billion to private equity, $500 million to clean energy and $500 million to credit financing, with other funds going to real estate. (Reporting by Daina Beth Solomon; Editing by David Gregorio and Grant McCool)

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