Background on Cox and its Mexican Investment Plan
Cox, a Spanish energy company, has announced its new strategic plan focusing on Mexico. The company intends to invest more than $10 billion in water and renewable energy projects by 2030, according to CEO Nacho Moreno’s statement to Reuters.
Key Components of the Investment Plan
The investment includes acquiring Iberdrola’s assets in Mexico for $4.2 billion, a “transformative” move that has already enabled Cox to meet its 2028 targets, as per Moreno.
- The acquisition includes 15 power plants with a combined capacity of 2.6 gigawatts and a renewable energy project portfolio of 11.8 gigawatts.
- Cox plans to develop at least 2-3 gigawatts from this portfolio, with a focus on six desalination projects requiring approximately $1.5 billion in investment.
Strategic Synergies and Financial Expectations
Moreno anticipates synergies between Cox’s water and energy operations and its service unit, which offers engineering, operation, and management of installations and infrastructure. The service subsidiary will handle the engineering for the new capacity Cox develops.
Cox expects this acquisition to significantly surpass its revenue estimates for the year, reaching approximately $2.7 billion, and more than triple its forecasted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to $720 million.
Operating cash flow is projected to rise to $450 million, compared to the previously estimated $100 million.
Financing and Partnerships
The acquisition will be financed 75% through debt and the remaining 25% with equity, executed via a new company owned by Cox. Cox will contribute capital alongside two international investors who will receive preferred shares, according to Moreno, who did not disclose their identities.
For debt financing, Cox has secured support from major financial institutions such as Citigroup, Bank of America, Santander, Barclays, and BBVA.
Key Questions and Answers
- What is Cox’s new strategic plan focused on? The plan centers around investing over $10 billion in water and renewable energy projects in Mexico by 2030.
- What assets is Cox acquiring from Iberdrola in Mexico? Cox is purchasing 15 power plants with a combined capacity of 2.6 gigawatts and a renewable energy project portfolio of 11.8 gigawatts.
- What are the expected financial outcomes of this acquisition? Cox anticipates revenue to surpass $2.7 billion and EBITDA to triple to $720 million.
- How will Cox finance this acquisition? The acquisition will be financed 75% through debt and 25% with equity, supported by major financial institutions including Citigroup, Bank of America, Santander, Barclays, and BBVA.
