The Multilateral Investment Fund announced the approval today of $7 million investment and a $45,000 grant for technical assistance to establish a venture capital fund that will help finance the expansion and modernization of small businesses supplying services and products to the tourism industry in Mexico.
The fund, to be called the Fund for Small and Medium-sized Ancillary Tourism Enterprises, Enterprises, will invest in approximately 14 to 18 Mexican businesses with strong growth potential and skilled management. To qualify, the firm must have sales and assets of under $5 million and less than 100 employees.
The fund will provide small and medium-sized enterprises (SMEs) with resources for financial or business restructuring, expansion, development of new products and technologies and management improvement.
The project will be carried out by Fundación Empresa y Crecimiento, an instrument created by multinational corporations in Spain that promotes social and economic development by contributing to an international network of capital funds for SMEs.
Other organizations contributing to the fund, which may eventually total as much as of $30 million, are Nacional Financiera of Mexico and Gestora de Inversión S.E., a management company.
Tourism in Mexico represents about 9 percent of the economy and accounts for nearly 2 million jobs.
In the past two years, however, the country has lost world market share in the tourism, a downward trend reflecting a need for greater competitiveness, especially for small firms that have difficulty in raising capital.
In addition to easing a scarcity of credit, the project is designed to demonstrate to other potential investors the feasibility and financial appeal of investing in SMEs. The project will also test new concepts for reducing transaction costs.
The Multilateral Investment Fund, an independent fund administered by the Inter-American Development Bank, is dedicated to promoting private sector development in Latin America and the Caribbean through grants and investments.