Conservative credit practices give things a different complexion south of the border, say Mexico’s private equity professionals, and the credit freeze can be private equity’s opportunity. It hasn’t come yet, but Mexico is in for a hard ride. Latin American economists keep up the refrain; the region’s fundamentals are solid, governments have stronger reserves than ever, countries and markets have won a real measure of independence from the US. All this is true. But Mexico is a particular risk situation.

Nearly 80% of Mexico’s exports go to its US neighbour; compared to 15% or less, for example, in the case of the other regional economic power, Brazil.

Mexico is not the only Latin American state to be heavily dependent on oil revenues (which make up about a third of the budget). But it is the only major economy where the second largest source of foreign currency infows comes from remittances sent home by the roughly 20 million Mexicans working north of the border.

“To my mind there are two big immediate issues,” says John Paul Moscarella, executive vice president of Econergy and manager of its CleanTech fund...

For further details subscribe to or request a trial of emerging Private Equity.