José Luis Manzano
PRESIDENT OF INTEGRA CAPITAL
Argentina 2018 I Economy I Leader
BIOGRAPHY With a deep understanding of Latin American public policy and global emerging markets, he has significant experience in the investment, media and energy industries. He is also a shareholder of Grupo Uno and Phoenix Global Resources. Active in the Peronist party where he acted as Secretary General, he was appointed as Homeland Security Minister under President Carlos Menem administration.
“OUR TRACK RECORD HAS ALLOWED US TO WORK WITH THE BEST COMPANIES IN THE WORLD FOR OUR PROJECTS.”
INTEGRA CAPITAL HAS INVESTMENTS IN THE ENERGY, MINING, INFRASTRUCTURE AND MEDIA SECTORS. CAN YOU TELL US MORE ABOUT THE COMPANY’S HISTORY?
We are a financial and investment firm that has invested in a diversified portfolio in Argentina and internationally. We are very bullish in the energy and mining sectors, but we also have investments in the media and infrastructure sectors. Through a highly qualified and experienced team, with a proven track record of successful transactions, we are focused in high-risk and high-return investments. We are responsible for 20-30% of the original investment and after de-risking, we will bring other investors to develop the project, normally large investment funds. Our track record has allowed us to work with the best companies in the world for our projects, for example: in the upstream sector with Mercuria; in the electricity sector with Michael Stevens, a private investor from UK; in fiber optics with Carval Investors from the US; and in distress papers with Gramercy Fund. There are particular cases, such as our investments in lithium, that we are taking all the risks ourselves.
WHAT ARE THE MAIN INVESTMENTS OF INTEGRA CAPITAL IN ARGENTINA?
We have been very aggressive in the energy sector, especially in the Vaca Muerta where we have acquired a large acreage with Phoenix Global Resources and another investment vehicle. We have also invested in the Golfo San Jorge Basin, a hydrocarbon-rich sedimentary basin located in eastern Patagonia, in Cuenca Noroeste in the northwest region and most probably we will be in Tierra del Fuego.
We are doing an investment facility dedicated to energy-related infrastructures, such as pipelines, generation, and water for personal and industrial use. In the electricity sector, we will be revamping EDEMSA, the Electricity Distribution Company of Mendoza, through a substantial investment program of nearly $100 million dedicated to modernizing the company’s infrastructure and move towards an intelligent grid. Additionally, we made an offer to buy Metrogas, the largest gas distribution company in Argentina. We continue to look for other opportunities in the energy sector and we are closely looking at renewable energy. We have presented a project at Renovar II but lost it and we will be presenting again at Renovar III. Another option is not doing a PPA but going straight to final customers.
In the mining sector, we have just finalized the funding structure and hiring of the team that will work in the extraction and production of lithium. We will start by analyzing and identifying the resources to make sure they can be used for battery production, as this will be the final objective of this project. We are responsible for the entire funding and de-risking and will bring a partner at the right time. We are working on other projects as well such as an aqueduct in Entre Rios province, the start of operations of a fiber optic cable company that will operate in 18 provinces and investments in the energy sector in Venezuela.
Currently, our investment portfolio is divided as follows: 60-70% in Vaca Muerta and electricity; 15-20% in fiber optics and media and the rest in lithium, Venezuela, and new opportunities.
IN YOUR OPINION, HAS ARGENTINA BEEN ABLE TO POSITION ITSELF AS AN ATTRACTIVE INVESTMENT DESTINATION TO FOREIGN INVESTORS?
We always have the possibility to have an emotional attachment to Argentina because I love my country but from a strict investor perspective, I believe that the majority of the political system is committed to a market economy. The Government is working together with moderated-Peronism to pass laws and this what is making reforms possible. There is no coalition but a governability deal to take the difficult decisions and make reforms effective. The Government has proven to have a sensibility to the challenges of the country.
There are numerous investment opportunities in all economic sectors and foreign investors receive the same treatment given to local investors. The fact that Argentina hasn’t yet joined the MSCI Index is another reason why I believe that there is still a huge upside to the country. If you compare the capital markets to other neighboring countries such as Brazil and Chile, the potential for growth is huge.
With the previous Government, the biggest bottleneck was financing and now it is human resources. As the country has been isolated, we have to repatriate professionals and there is a lot of competition to attract the best people. The economy of Argentina is stabilizing and is expected to grow by 2.5-3% in 2018 and 4% in 2019. Inflation should continue to decrease reaching 12-15% and the fiscal situation is improving which will gradually return Argentina to being competitive.