ProInversión Perú: Targeting sustainable, world-class infra to boost Peruvian economy

An exclusive interview with Mr. Alberto Ñecco, EXECUTIVE DIRECTOR OF PROINVERSIÓN

 

Peru has an infrastructure gap that has been estimated to be around US$ 160Bn, but ProInversión Perú has seen this gap as both a challenge and an opportunity to bolster Peruvian economy. In this interview, ProInversión Perú Executive Director Mr. Alberto Ñecco talks to us about the promising developments and opportunities for infrastructure investments in Peru.

 

Good morning, Mr. Ñecco! Thank you for taking the time to talk to us today. First, please can you tell us how ProInversión Perú started? What were the motivations and historical context that led to the creation of the agency?

Good morning. The Agency for the Promotion of Private Investment (ProInversión) is a public agency in Peru. Its mission is to incorporate the participation of private investment in the development of infrastructure projects in the form of Public-Private Partnerships (PPPs), in order to boost the country’s competitiveness and promote its sustainable development. 

From 2011 to 2018, ProInversión has awarded 83 PPP projects with an estimated value of US$ 27.41Bn. Moreover, in recent years, ProInversión has promoted the development of projects under the innovative modality called “ Works for Taxes”. Through this modality, companies pay up to 50% of their annual income tax through the execution of prioritised public works.

 

You are an economist with over 15 years of experience in Investment Banking, Corporate Finance, and Project Management, both in Peru and internationally. You became the Executive Director of ProInversión Perú in October 2017. How was the transition into your current position?

After many years in the private sector, I felt that it was my duty as a Peruvian to apply all the knowledge I had acquired and try to make a difference in the public sector. ProInversión is one of the most important government institutions in Peru and the scope of its actions impacts the lives of millions of Peruvians who expect more and better infrastructure which allows them to improve their quality of life and increase the competitiveness of their productive activities.

 

So far, what has been your proudest moment as ProInversión Peru’s Executive Director?

From the beginning, we have been focussed on developing a world-class agency for infrastructure projects, seeking to reduce Peru’s current infrastructure gap. This work has already been reflected in the projects we have awarded for the benefit of the Peruvians. For example, the Michiquillay Project (mining project) gained wide social acceptance and will create employment in the region. The wastewater treatment plants of Lake Titicaca will improve quality of life for 1.2 million people in the Puno Region.

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Peru has an investment grade international credit rating, the second highest in Latin America, from the three main credit rating agencies (S&P, Moodys, and Fitch).

The Latin American region is attracting investors hailing from China and the European Union. What opportunities and growth prospects does Peru attract investors most? What do you think is your competitive edge over other Latin American countries?

Peru has an investment grade international credit rating, the second highest in Latin America, from the three main credit rating agencies (S&P, Moodys, and Fitch) and has managed to break the common false dichotomy that high growth tends to carry along inflationary pressures by presenting the highest economic growth and lowest inflation rates in the region over the last two decades.

In particular, growth has been impressive with a constant annual growth rate of over 6% in the last 15 years. Furthermore, Peru offers a favourable legal framework for foreign investment, which includes:

• Non-discriminatory treatment: Foreign investors receive the same treatment as local investors according to the Peruvian constitution

Unrestrictive access to most economic sectors

• Unrestricted free flow of capital

• Free competition

• Guarantee of Private Property

Unrestricted rights to purchase equity shares

• Unrestricted access to internal and external credit

• Access to international disputes settlement mechanism

Peru participates in the Investment Committee of the Organization for Economic Cooperation and Development (OECD) – It promotes the implementation of the Guidelines for Multinational Enterprises.

Lastly, Peru has an infrastructure gap that has been estimated at around US$ 160Bn, which is both a challenge and an opportunity to continue investing in this sector.

 

ProInversión is focussed on creating world-class infrastructure that improves the life of the Peruvians and helps to create a more robust economy, with the assistance of top-tier advisors.

What do you think are the most promising industries/sectors in the years to come? And how is ProInversión Perú preparing for such development?

We believe that Transportation, Water and Sanitation, and the Social sector such as Health will have a great impact in the foreseeable future. At the end, ProInversión is focussed on creating world-class infrastructure that improves the life of the Peruvians and helps to create a more robust economy, with the assistance of top-tier advisors. We are working to attract top advisors in the market according to each project’s needs. For this we perform business intelligence using investment platforms which let us be aware of the details behind the deals being made in every part of the world and by sector.

 

Sustainability plays an important role in ProInversión’s investment projects. On each project there is an Environmental Impact Study, which is one of the pillars of the formulation phase of projects, aiming to avoid a negative impact on the natural or ecological functions of the featured area.

There has been a growing need and interest in the green economy. What strategies has ProInversión Perú utilised to cater to this international demand?

Sustainability plays an important role in ProInversión’s investment projects. On each project there is an Environmental Impact Study, which is one of the pillars of the formulation phase of projects, aiming to avoid a negative impact on the natural or ecological functions of the featured area. For future projects, ProInversión is assessing the incorporation of increased eco-driven commitments and standards for the required service levels.

 

Peru ranked 2nd in Latin America based on the World Bank’s Ease of Doing Business Ranking in 2018. What has been ProInversión Perú’s most significant contribution in helping the country achieve such accolade and what are the steps you take to retain the position or even become number one in 2019?

ProInversión is proud of its four strategic pillars that make us different from other government agencies with the PPP model.

The first is the “Centre of Excellence.” We must strive to become a centre of excellence, so we can advise the government in the formulation and structuring of PPP projects. To achieve this, it is critical to attract top-tier consultants as well as to develop standardised concession contracts that provide the market with a degree of predictability.

Our second major focus is to promote private investment where social and environmental management is a priority. In the work we do, we have identified the importance of an efficient social and environmental management, to guarantee sustainable, bankable projects that are beneficial to society in general, and the population of Peru.

The third point is our commercial strategy. Here, we have been applying an orderly, organised methodology to identify, segment, and attract potential investors. Our commercial intelligence is highly specialised in retaining the right investors for each project. We will continue to participate in local and international roadshows, as well as utilise digital tools to keep attracting first-rate investors who are highly committed to our economy.

Lastly, we will continue our focus on organisational efficiency level, so we can offer the best possible working conditions and attract the best human capital to our organisation.

  

Employees are the most important assets in a company. What is your strategy to keep the best talents?

For the last couple of years, ProInversion has been trying to improve internal communication as well as to empower each division of the agency. Moreover, we have established clear KPI´s to motivate the personnel in achieving the excellent results we pride ourselves of accomplishing.  We have been working with the Ministry of Economy to improve conditions for employees, as well as to attract the best elements of the market and have established a priority for us to retain the best employees that the agency has.

 

What achievements do you want ProInversión Perú to accomplish in the coming years? What course of action are you taking now in order to attain the future you have envisioned?

Our main objectives are to award the 56 PPP projects that we have for the 2019-2022 pipeline. These projects amount to an estimated US$ 10.6Bn. If we view it by sectors we have a much-diversified platform, a menu of opportunities for investors in transport (38%), water & sanitation (21%), health (11%), as well as energy & hydrocarbons (8%), between others. At the same time, to anchor market expectations and make the PPP process more efficient, thus strengthening our institutions, we will keep moving towards having a unique financial modelling guideline and full contract standardisation, where we have just retained a top notch international legal firm as an advisor.

 

Lastly, on a lighter note, work and personal life do not always go well together but the importance of balancing both is evident. What are your tips to retain the balance between your work and personal life?

After many years, I have finally been able to balance my personal life with my professional life. I have an amazing family that supports me and understands how demanding my job is, and more importantly, they share with me the importance and the passion for the world and the impact that can be achieved for our country.

 

Thank you very much Mr. Alberto Ñecco for sharing your insights with us.

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About the Interviewee

Alberto Ñecco, Executive Director of ProInversion, Degree in Economics from the University of Lima. MBA in Management and Business Administration from INSEAD, Alberto Ñecco has over 15 years of experience in Investment Banking, Corporate Finance and Project Management, both in Peru and internationally. He has also occupied leading managerial positions with responsibilities over projects in several countries of the Latam and Caribbean Regions.

Throughout his career, he has been involved in various corporate finance operations, mergers and acquisitions and complex negotiations in various sectors and territories through international organizations as Investment Bank ING, Deutsche Bank and Credicorp Group.

At ProInversion, Alberto Ñecco, held the position of Director of the Special Projects Division, before being named acting Executive Director in October 2017. In April 2018 he was confirmed as Executive Director of ProInversion.