Background and Relevance of Andrés Manuel López Obrador
Andrés Manuel López Obrador, the former President of Mexico, played a pivotal role in the recent development regarding the acquisition of 13 energy generation plants from Spanish giant Iberdrola. His administration aimed to ensure that the majority of electricity generation would be under state control.
Fiemex’s Initial Public Offering (IPO)
The Fideicomiso de Inversión en Energía México (Fiemex) launched an Initial Public Offering (IPO) on the Mexican Stock Exchange as part of the Mexican government’s plan to finance the purchase of 13 power generation plants from Iberdrola.
Fiemex, managed by Mexico Infrastructure Partners (MIP), was the investment vehicle contracted by the Mexican government to administer the trust and raise $4.5 billion through the sale of various series of bonds.
Investment Focus and Portfolio
The Fiemex investment focuses on electricity generation projects operating under the terms of the Electric Industry Law. The newly formed Fibra E, with the ticker symbol ‘FIEMEX’, holds a portfolio of 13 plants—12 combined cycle and one wind power plant—spread across seven Mexican states, with a combined capacity of 8,539 megawatts.
Although Iberdrola sold these plants as part of a strategy to expand its renewable energy capacity, the plants located in Nuevo León, Oaxaca, Tamaulipas, Durango, San Luis Potosí, Baja California, and Sinaloa still have an average remaining useful life of 24 years.
Transaction Details
Iberdrola sold the 13 plants to López Obrador’s government for $6,150 million, representing approximately 55% of its business in Mexico.
MIP signed the agreement with the Spanish company in mid-2023. Mexico holds a majority stake in these plants through the Fondo Nacional de Infraestructura de México (Fonadin).
Initially, the acquisition was financed through the issuance of $2.4 billion in Development Capital Certificates by Fonadin and the procurement of approximately $3.9 billion in debt—$1.9 billion from five private banks and $2.5 billion from development financing institutions.
Fonadin retained 65% of the issued Development Capital Certificates (CKDs) and sold the remaining 35% to various fund managers for retirement purposes.
Of the CBFEs issued by the new Fibra E, 64.59% are held by Fonadin, 33.67% belong to afores and other investors, and 1.63% remain as performance certificates that MIP may receive if it meets certain minimum distribution targets.
Key Questions and Answers
- What is Fiemex? Fiemex, or the Fideicomiso de Inversión en Energía México, is a trust established by the Mexican government to manage and invest in energy infrastructure projects.
- Who is Iberdrola? Iberdrola is a Spanish multinational utility company with operations in Europe, North America, and Asia. It is one of the world’s largest producers of wind energy.
- What plants were acquired from Iberdrola? The Mexican government purchased 13 energy generation plants from Iberdrola, including 12 combined cycle and one wind power plant.
- How was the acquisition financed? The acquisition was initially financed through $2.4 billion in Development Capital Certificates issued by Fonadin and approximately $3.9 billion in debt, with $1.9 billion from private banks and $2.5 billion from development financing institutions.
- What is the significance of this transaction? This transaction ensures that a significant portion of Mexico’s electricity generation remains under state control, aligning with López Obrador’s administration goals.
