Sales and Trading
A highly connected global capital partner
November 12, 2019A highly connected global capital partner
Moncef Attia, Managing Director, Global Investment Banking Energy, U.S., and Rolf Schmitz, Managing Director, Corporate Banking Energy, U.S., discuss capital investment in the Latin American Energy sector and how Scotiabank can help navigate diverse markets from North to South America.
The dynamic energy market across the Americas
When it comes to capital investment in the Energy sector in the Americas, pipelines are a key component. This applies not only to physical pipelines for moving crude oil and natural gas, but cross-border pipelines for capital and expertise that are critical for energy companies, investors and other stakeholders.
To discuss the importance of connectivity across diverse markets from North to South America, we spoke to Scotiabank’s Moncef Attia, Managing Director, Global Investment Banking Energy, U.S., and Rolf Schmitz, Managing Director, Corporate Banking Energy, U.S., on the importance of on-the-ground global expertise and resources in the provision of corporate and investment banking services to all players in the Energy sector.
Linking capital to resources
Latin America has become an increasing focus for institutional investors from major capital markets, such as the United States and Canada. In particular, energy resources and energy-infrastructure related assets have emerged as attractive targets for strategic and financial investors looking for long-term investments. For Attia, it’s a relatively simple equation: Latin America has material natural resources and companies operating in the region, including mid-market and junior exploration-and-production names, frequently look to banks and institutional investors to fund acquisitions and associated projects and infrastructure.
At the same time, investors in developed economies are seeking energy investments offering strong long-term return potential outside of their highly competitive domestic markets. Selected Latin American operations, despite their nominal status as emerging market positions, offer these investors attractive opportunities within their risk tolerances.
“Mexico is a member of the Organisation for Economic Co-operation and Development. Colombia is viewed as also having a very favourable investing environment, similar to Peru or Chile,” says Attia. “In an emerging markets context, investing in many Latin American countries offers a very advantageous risk-reward balance, because the risk today is relatively low. In Colombia, there has been contract sanctity for as long as I can remember, and we’ve seen many investor-friendly policies implemented across the region.”
The key role of the banking partner
In order to form the link between Latin American energy resources and investment capital, the role of the investment bank and its attendant resources, network and expertise, becomes critical. Schmitz stresses that a given banking partner’s degree of connectivity across jurisdictions is an increasingly important component of taking a transaction from origination to closing while advising clients on the structuring of the deal, local regulations and country risk considerations and other vital issues. This is further underscored, he notes, by the capital-intensive nature of energy projects and the specialized industry expertise required for successful investment in the sector.
The global dynamics of the energy market have led to the formation of regional hubs of financial and technical expertise across the globe, from the large centres of capital like New York, to the Latin American markets in which these resources are located, to key cities like Houston, Texas, which has been established as a centre of excellence in the Energy sector through a combination of a long history in the industry, its geographic proximity to both centres of capital and energy resources, and other factors. An effective banking partner needs to have on-the-ground resources in all these key hub markets, Schmitz says.
“When we speak about Latin America, or the Pacific Alliance (Chile, Colombia, Mexico and Peru) specifically, there are obviously very distinct qualities to each country,” Schmitz adds. “Each country has a very unique set of resources, and a political and regulatory framework that governs the monetization of these resources. If we look at energy in the context of these countries, you need to have very detailed expertise about how the energy and financial markets operate in each country.”
Scotiabank: a truly global bank with energy expertise
The fact that Attia and Schmitz are both based out of Houston is itself a reflection of Scotiabank’s approach to global investment banking: to have banking specialists on the ground in the connected hubs pivotal to the global Energy sector. Houston is also home to Scotiabank’s “technical team”: a carefully selected group of skilled engineers and geologists from around the world who provide unparalleled expertise, which then translates into value-added advice for the banks, energy companies, and institutional investors alike. These technical and investment specialists are located strategically between the Bank’s New York and Latin American operations. In both these latter markets, Scotiabank’s history dates back to more than 100 years.
“The fact that we have that presence on the ground allows us to fully understand and appreciate the nuances of regulations and the economic environment in Latin America,” says Attia. “Add to that the fact that oil and gas, and commodities in general, are part of the DNA of Scotiabank, I believe this duality really allows us to take that long-term view and be a steady partner for our clients.”
For more information about Scotiabank’s global energy expertise, please contact:
Managing Director, Global Investment Banking – Energy, U.S.
Managing Director, Corporate Banking – Energy, U.S.
Head, Global Investment Banking – Energy, U.S. and Latin America
Managing Director and Head, Global Investment Banking – Energy