José Rinkenbach
Founding Partner
Ainda Consultores

Consultancy Evolves into Investment Fund

Wed, 01/18/2017 - 15:24

That PEMEX does not have a team devoted to dealing with third party business interests is a red flag for the former monopoly and it could also face difficulties working as an equal as it turns itself into a productive and profitable company, according to Mexican consultancy Ainda Consultores. PEMEX is used to subcontracting and ordering companies rather than working as equal partners, says José Rinkenbach, Founding Partner at the consultancy.

“PEMEX’s objective is to become a profitable company. It might sound like a simple idea but it is a complex change to make,” Rinkenbach warns. While much attention is being paid to the alliances PEMEX will form, there is not enough focus on the rest of its business. “When it comes to alliances PEMEX should focus on deepwater because this is where it lacks experience and knowledge,” he says, but adds that most of its focus should be on the areas where it can be profitable independently. The state-owned company “should channel the majority of its resources into offshore shallow waters and southern areas with light crude oil reserves.”

Rinkenbach also points to the cultural mindset at PEMEX as a challenge. “PEMEX is on a good path with the alliances it is making,” he says. “But the real challenge is the shift in cultural mindset that is required for it to be successful.”

The company executive says alliances are also a key to the success of the consultancy’s own agenda as Ainda Consultores applies its “Mexican-specific know-how” in the newly opened oil and gas market while taking on a new direction. Historically focused on offering consultancy services to oil and gas companies, the firm is now diversifying with the ultimate aim of becoming an investment fund centered on long-term energy and infrastructure projects. “Our philosophy is partnering up. This will be key to taking on these big tasks,” Rinkenbach says. Alliances, he added, are one of the best leverages for this.

Ainda made a big step toward this goal in January 2016 when it signed a deal with Goldman Sachs’ Merchant Banking Division to make joint investments in the oil and gas, power generation, transportation and water infrastructure sectors. “Ainda offers expert knowledge of the Mexican industries and Goldman Sachs offers its strength as one of the largest investment funds in the world,” Rinkenbach says. The investment fund will work based on CKDs, which are financial instruments used by the Mexican Stock Exchange to fund projects in sectors with long-term investment perspectives. “Ainda will be like a private equity fund but public,” says Rinkenbach.

Investment in the oil and gas sector is where most of the firm’s business will come from in the coming years and it has enlisted a high-profile list of industry experts to form its investment committee. The investment fund will focus on production, rather than exploration, due to the financial risks involved in purely exploratory projects.

Rinkenbach also believes that service providers to the upstream sector should “integrate vertically to create conglomerates and expand their services to the entire E&P value chain,” as the industry has shifted its priorities. While in the past the company with the lowest bid would often win a contract, today efficiency and productivity takes precedence. Integrated solutions increase a service provider’s ability to attain this, he says.

As well as betting on the investment potential of Mexico’s oil and gas industry, Ainda Consultores is counting on the country’s talented people. “We are taking our investments in Mexican human capital very seriously,” Rinkenbach says, with initiatives such as an executive course organized by the firm and delivered at ITAM. “Twenty-nine people graduated last year from the program, which focused on investment in exploration and production projects.”