Iberdrola Signs Deal to Sell Most of Mexico Business for $6B

Iberdrola has announced that it has signed a binding deal to sell 55 percent of its Mexico business for $6 billion.

In a statement posted on its site, the company revealed that Iberdrola Mexico and Mexico Infrastructure Partners (MIP) signed an agreement which sees a trust led and managed by MIP acquiring 55 percent of Iberdrola’s gross operating profit (EBITDA) in the country. The deal includes associated contracts, more than 410 related jobs, and has the financial support of Mexico’s National Infrastructure Fund, as well as other public financial entities linked to the Mexican government, Iberdrola highlighted.

The company noted in the statement that it will keep 13 plants, all its activity with private customers, and its portfolio of renewable projects “to continue increasing its wind and solar assets in the country in the coming years”. Iberdrola added that, within the agreement, 99 percent corresponds to combined cycle gas plants and 87 percent to plants operating under the Independent Power Producer regime, contracted with the Federal Electricity Commission (CFE).

In the statement, the business highlighted that the following assets are included in the deal; the combined cycle gas plants operating under the Independent Power Producer regime contracted with the CFE - Monterrey I and II, Altamira III and IV, Altamira V, Escobedo, La Laguna, Tamazunchale I, Baja California, Topolobampo II, and Topolobampo III; the La Venta III wind farm; and the private gas combined cycle plants Monterrey III and IV, Tamazunchale II, and Enertek.

Iberdrola also revealed in the statement that, at a recent extraordinary session of Mexico’s Energy Regulatory Commission, the body authorized Iberdrola’s generation permit for the Santiago wind farm as the only item on the agenda.

This wind farm is located in the state of Guanajuato and will have a capacity of 105 megawatts, Iberdrola pointed out, adding that the generation permit application was submitted to the regulator by the Spanish company on October 13, 2022.

The project was voted and approved unanimously in a brief session, Iberdrola said.

Iberdrola, MIP MOU

Back in April, Iberdrola announced that Iberdrola Mexico and MIP had  signed a memorandum of understanding (MOU), “whereby the trust led and managed by MIP will acquire 8,539 megawatts of installed capacity”.

In a company statement at the time, Iberdrola noted that the agreed value for the sale amounts to approximately $6 billion but added that this may be modified based on the closing date of the transaction and other adjustments. Iberdrola also highlighted in April that the deal was subject to the agreement and the signing of definitive contracts by the parties, as well as obtaining the necessary regulatory approvals and the fulfilment of certain conditions that are standard in this type of operation.

Following the signing of the MOU, Iberdrola Chairman Ignacio Galán and Mexico President Andrés Manuel López Obrador met and announced the start of a new phase, a statement posted on Iberdrola’s site in April outlined.

“Both presidents are committed to advancing the development of renewable energy in the country,” Iberdrola said in this statement.

“The operation will be supported by the Government of Mexico through the financial support of the Mexican National Infrastructure Fund (Fonadin) and other public financial entities,” the company added.

“Iberdrola is grateful for the support and flexibility shown by the Mexican government in reaching this agreement and considers Mexico a strategic country with potential for growth and expansion, where it will show its support for Mexico and the state by developing renewable capacity,” Galán said in the statement.

Obrador noted in the statement that “the agreement reached with Iberdrola, which allows progress to be made in the implementation of Mexico’s new energy policy, marks the beginning of a new stage in which the company will actively participate in the country's renewable energy development”.

According to its website, Iberdrola is a global energy leader, the leading wind power producer, and one of the largest electricity companies in the world in terms of stock market capitalization. As of 2022, the company had installed capacity of 60.761 megawatts and more than 40,000 employees, its site shows. The business, which traces its roots back to 1840, is headquartered in Bilbao, Spain.

To contact the author, email andreas.exarheas@rigzone.com