Enrique Crespo en entrevista con Latam Investor

COUNTRY REPORT | GUATEMALA CEO of CMI Capital,

Enrique Crespo,

highlights the best investment opportunities in the country…

L

atAm INVESTOR: How can investors develop large projects in Guatemala and avoid social protests?

Enrique Crespo: CMI Capital built one of the most important hydroelectric plants in Guatemala. Renace is a power plant that generates approximately more than 300 MW, built over the course of the last 25 years. When we arrived in the area, we realised that we were in the middle of the ‘forgotten Guatemala’. The state wasn’t present in the area, which is in the north of the country, so there were vast social and economic gaps with the capital city. The lack of basic infrastructure, schools and public health facilities was appalling.

We applied our values, which go by

– that’s the capitalism we believe in,

a positive social impact with these

that’s why our purpose is to generate

large projects.

impact investments that drive sustainable development. Although we have

The issue is that these projects require

faced some minor challenges over the

massive investment. For example, we

last 25 years in terms of communi-

built 93 kilometres of road to connect

ties, which have been caused by some

these forgotten communities. If we had

groups that wanted to manipulate lo-

waited for the state to build them, we

cal feelings, I am convinced that truth,

would probably still be waiting. For

justice and common sense always pre-

companies to make that sort of invest-

vails.

ment they need long-term legal certainty. Investors need to know that the

We have been able to develop a whole-

rule of law will be upheld for the next

some social responsibility programme,

25 to 50 years. That is the challenge

where we have invested an important

for the Guatemalan state if it wants to

amount over the last 25 years and fos-

attract more investment to capital-in-

tered opportunities with a life cycle

tensive sectors.

approach to the betterment of communities. We are not experts in public health or education or social issues but we have partnered with experts in those areas to develop our social responsibility programme.

the Spanish acronym of REIR, which is

In 2012 we also partnered with the So-

Spanish for smile: responsibility, excel-

cial Progress Initiative, spearheaded

lence, integrity and respect. We try to

by Michael Porter of Harvard Universi-

live by those values every day and ap-

ty. His system is intended to establish

proach the project with those values in

KPIs for the progress of countries, but

mind. We are convinced that you can’t

we challenged them to develop KPIs to

have sustainable successful businesses

measure the social progress of com-

over the long term in failed communi-

munities. We interact with 29 commu-

ties.

nities with a total of 21,000 people and this initiative set a baseline to ensure

We are firm believers in responsible

that we are having a positive impact.

capitalism. We don’t believe in the cap-

We developed 50 community KPIs, for

italism of the past, when the only thing

example the education abandonment

you pursue is profit at any cost. We

index, the respiratory illness index and

want to find the optimal equation with

an index for teenage pregnancies. We

reasonable and competitive profit for

have monitored these KPIs for a dec-

shareholders but not at the expense of

ade and with our intervention we have

communities, suppliers and workers.

managed to improve each one. This

We want to create value for all of them

shows that the private sector can have

LatAm INVESTOR

28 Q1 2022

LAI: CMI Capital’s $700mil- LAI: Where are the best relion renewable energy bond newable energy opportuniissue was the largest in ties in Latin America?

Central America; are invesEC: Panama is definitely a country that tors rewarding your ethical provides opportunities. Especially for approach?

CMI Capital as it will be a new geography for us that will improve the overEC: Yes, our approach is being reward-

all country risk of the portfolio. As for

ed. We aren’t in the energy business

Guatemala, there is currently a surplus

just to generate electricity, nor the real

of power generation capacity but we

estate sector to build houses or the

believe there is room to diversify the

finance industry to make money. Our

matrix. In particular there are oppor-

ultimate goal is sustainable economic

tunities in the short term for wind and

development and that is increasingly

solar. Prices are still attractive for good

what international institutional inves-

projects as long as we can secure prof-

tors want to support.

itable PPAs with distribution companies. The current trend of rising oil and

Five years ago, we were probably not

coal price provides a huge incentive for

ready for the prime time but in 2021 all

Guatemala to become completely in-

of the stars aligned. There was a strong

dependent from fossil fuels.

demand for ESG investment opportu-

Now the trend is reversing. Across every economic segment of the population, people are returning to the centre of the city. They can no longer take the four hours of traffic per day and are now prepared to sacrifice space for quality of life. That trend is a great opportunity for a real estate developer because you can attend each segment of the market – affordable, luxury, etc.

– with vertical solutions. The valley will grow upwards in the coming years. Another factor that enhances the trend is that 25 years ago people didn’t want to live in apartments because they wanted their own plot of land. That has changed in the last decades, partly because mass emigration to the US has shown many Guatemalans the benefits of vertical housing.

LAI: What can we expect next from CMI Capital?

nities in the region and we had just put

The Dominican Republic is another at-

together a well-diversified portfolio of

tractive market. We are already pres-

renewable assets. They had all entered

ent with the Mata Palma Solar Park but

EC: The pandemic shows the great

operation, which meant we could offer

we see further opportunities because

opportunities for sustainable develop-

a mix of technologies and geographies

a large section of the matrix is based

ment and impact investing, which are

that were generating profits.

on fossil fuels. Enlarging our renewable

part of our core. I think the current ge-

footprint in the Dominican Republic

opolitical and macroeconomic events

will be a key part of our strategy.

and post-pandemic mega trends, that

The issuance was a great opportunity

will shape the world for the next 25

for us to establish relations with institutional investors from all over the world. In the primary market around 50% of our investors were from the US, 30% from Europe and the rest from

LAI: What trends will shape Guatemalan real estate?

years, provide massive opportunities for nearshoring. We are close to the largest market in the world, which is a massive opportunity for Guatemala and the region.

Asia and Latin America. So, we have a global footprint of renewable investors

EC: Without doubt the regional real

that believe in ESG and recognise that

estate market has become more com-

Our parent company CMI Corporation

renewable energy can help Latin Amer-

petitive in recent decades. In Guatema-

is particularly well-positioned with

ica become independent from fossil fu-

la real estate is still a local business and

our capabilities in renewable energy,

els. The capital we raised allows us to

there are lots of opportunities here.

project management, logistics finance

keep investing in greenfield projects in

Guatemala City is a valley surrounded

and food. At CMI Capital we will look

the region and also M&A growth.

by mountains and back in the 1970s

to bundle our services to provide inte-

and 1980s people began to move out of

grated solutions for investors. So, we

Our issuance was five-times oversub-

the central part of the valley to look for

won’t just build renewable projects, or

scribed, which shows the demand

a larger home. People were prepared

finance vehicles, but put them togeth-

there was for our renewable energy

to trade a longer commute for a bigger

er in a sustainable, ESG-driven package

portfolio. We could have lowered the

house. But the transport infrastructure

that will prove very attractive to inter-

yield on offer but we thought it was

didn’t keep up with this trend, so for

national investors. Imagine, for exam-

important to work with as many new

the last two decades traffic has been a

ple, a green-powered business park to

names as possible.

big problem.

take advantage of nearshoring.

LatAm INVESTOR

29 Q1 2022