Introduction
Amidst a whirlwind of negative news and predictions dominating the national economy, Mexico’s business sector harbors sectors and companies where optimism thrives, translating into projects and investments. Alejandro Peón, General Director of Naturgy Mexico, a subsidiary of the Spanish multinational corporation with the same name, one of the largest players globally in natural gas and electricity, expresses his confidence in Mexico’s immense investment potential.
Naturgy Mexico and its Leader
Peón, a UNAM graduate and Mexican national, took charge of Naturgy Mexico in July 2020, just before the global Covid-19 crisis erupted. In 28 years of operation, Naturgy Mexico has become the leading gas distribution company in Mexico, operating across various regions including the Valle de Mexico, Nuevo Leon, Bajio, and Toluca.
With 12 distribution licenses, the company serves over 60 cities and municipalities, including Mexico City, representing 1.6 million clients. Peón has expanded gas distribution networks to over 52 cities, managing more than 23,000 kilometers of gas pipelines to serve 1.65 million clients in 14 Mexican states.
Recent Financial Moves
Recently, Naturgy Mexico executed a 4 billion peso issuance to recalendarize its debt. This move extends the payment schedule by 3.5 years, ensuring financial stability.
Currently, Naturgy maintains a healthy debt level at twice its Ebitda. Both Fitch and S&P have given the company top ratings.
Mexico’s Investment Potential
Peón views Mexico as a vast opportunity mine, driven by energy demand. The market shows that industries continue to require electricity and natural gas, with the Bajio region witnessing ongoing industrial park construction. Nationally, there’s a strong appetite for energy.
The Mexican Private Industrial Parks Association (AMPIP) is constructing over 70 industrial parks simultaneously. Both national and international resources are investing in projects, eager for growth.
New factory, hotel, and production unit initiatives indicate Mexico’s robust economic potential despite temporary setbacks.
Government Financial Support for Pemex
The Mexican government, through Hacienda led by Edgar Amador, issued structured notes before capitalization (P-cap) to bolster Pemex’s finances. A total of 12 billion US dollars was placed.
The fixed coupon rate of the instrument stood at 5.50% annually. While this is a positive step, it’s merely a temporary solution to Pemex’s substantial debt issue.
This new debt implies a commitment for Mexico’s public finances, as the debt will be backed. The fundamental solution Pemex needs, under Victor Rodriguez’s leadership, is structural and operational. It remains to be seen if the upcoming comprehensive plan addresses this.
Live Nation Entertainment’s Investment in Mexico
Entertainment News:
Live Nation Entertainment will acquire an additional 24% stake in OCESA, with Alejandro Soberon remaining CEO until 2032. CIE will retain a 25% stake in OCESA, and the option to buy/sell the remaining stake will extend until 2032.
Michael Rapino, Live Nation Entertainment’s President and CEO, highlighted their success in tripling concert attendees in Mexico since 2019, thanks to OCESA. Mexico has become the world’s third-largest music market.
Rapino expressed his hope for continued solid growth in the future.
Key Questions and Answers
- Who is Alejandro Peón and what is his role? Alejandro Peón is the General Director of Naturgy Mexico, a subsidiary of the Spanish multinational energy company. He oversees operations in Mexico, focusing on natural gas and electricity distribution.
- What is Naturgy Mexico’s investment plan? Naturgy Mexico plans to invest between 2,000 and 3,000 million pesos annually in Mexico over the next five years.
- What recent financial actions has Naturgy Mexico taken? Naturgy Mexico recently issued 4 billion pesos to recalendarize its debt, extending the payment schedule by 3.5 years.
- What is the significance of Live Nation Entertainment’s investment in OCESA? Live Nation Entertainment will acquire an additional 24% stake in OCESA, reflecting confidence in Mexico’s growing music market.
