The Capitalization and Investment Fund for the Rural Sector (FOCIR for its Spanish acronym) is a governmental institution created to promote investment in the rural and agribusiness sector. FOCIR began operations in 1994. Among its main objectives were a)increase long term financing for the agricultural and rural sector; b) offer financial and technical assistance to agribusinesses; and promote management capacity building, all these, through direct investment in Mexican companies. Although important results were obtained, in 2007 FOCIR began structural changes in its operations.

Currently, FOCIR works as a specialized agent of the Federal Government, operating as a second tier financial institution focused on the design, development and implementation of instruments that incentive private investment in a sector perceived as highly risked with low returns. These instruments vary from stop-loss programs through the creation and operation of private equity funds that join public and private resources to finance profitable agribusinesses that will help consolidate the chain of production and offer as well good returns to investors.

As of this date, FOCIR operates two private equity funds designed to respond to private sector needs, with co-investments from the Federal Government, State Governments and the Private Sector.

FICA

The investment vehicle that works as a General Partner or Limited Partner is a private trust fund constituted through cash deposits made by both state and federal governments, as well as private investors (both individual and/or institutional). It is operated by FOCIR as a General Partner and investments must be mainly private with specific resource allocations.

STOP-LOSS COVERAGE

FOCIR offers a stop-loss coverage to private equity funds where up to 50% of potential losses from an investment in the agribusiness sector are covered. A premium of up to 14% of the investment is charged based on the financial risk of the project.

In case of an eventuality, and if the company’s book value drops more than 30%, the coverage enters into force. Losses are distributed “Pari Passu” between FOCIR and the private investor.

If by the end of the investment term, books reflect any losses, the agreed percentage of these losses will also be covered.