Vinte: Supporting social housing in Mexico through the capital market
Over the last few years, the real estate development market in Mexico has continued its consolidation path among midsize players. As of 2005, approximately 35 percent of all the production was delivered by the five largest companies compared to 17 percent in 2012.
The rest are small and midsize homebuilders (SMEs) that have difficulty accessing medium- to long-term working capital finance. To gain access, they would need a third-party credit guarantee that enhances the risk of companies and investors to buy bonds issued by them.
This is the case of VINTE, a midsize housing developer that, despite having an innovative and sustainable business, because of its size needed a third party guarantee to access the capital markets.
The IDB, through a credit facility of up to US$150 million with the Banamex Financial Group, is supporting this company to develop the country’s capital markets and to allow VINTE to obtain the necessary financing to upkeep its business strategy.
Through a US$ 150 million credit facility with Banamex, the IDB is supporting Vinte, a medium-sized homebuilder with an innovative business model and a strong commitment to sustainability. The credit facility will allow IDB to provide a partial credit guarantee of 200 million Mexican pesos to Vinte to issue bonds in Mexico’s capital market. This will allow Vinte to diversify its funding sources, improve its long-term financing offerings, prevent liquidity constraints and reduce the cost of financing.
Through this project, Vinte expects to:
- Build 25,000 homes in six cities for middle- and low-income families in Mexico over the next five years, benefiting approximately 97,500 people.
- Further its commitment to implement social and environmental safeguards in accordance with international best practices.
- Incorporate “G7Habitat”: homes that include among other features, the Internet, eco-technologies and built-in community services.
- Bolster the emerging “green mortgages” market in the country