Ignacio Galán, executive chairman of Iberdrola. Image courtesy Iberdrola.
Global utility giant Iberdrola is selling assets in Mexico to Spanish multinational water and energy company Grupo Cox for $4.2 billion.
The deal includes 15 power plants with a combined capacity of 2.6GW, comprising 1,368MW of combined-cycle and cogeneration plants, 1,232MW of renewable energy assets, and a 12GW generation project pipeline, as well as commercial activities and a portfolio of projects under development.
Cox intends to put the assets into operation in the future, in line with its expansion plans in the country and the frameworks created by the Government of Mexico to promote new generation capacity.
Cox has an investment target of $10.7 billion in the country between 2025 and 2030. This includes the acquisition of Iberdrola Mexico’s platform, over $4 billion in new energy assets, up to $1.5 billion in water concession assets, and the development of a hub focused on Mexican welfare.
Additionally, Cox plans to co-invest in new generation projects alongside CFE (Federal Electricity Commission), the country’s state-owned electric utility company.
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The acquisition also includes the largest qualified user supplier in Mexico, with a 25% market share and more than 20TWh distributed across over 500 large clients.
Cox says the acquisition boosts their revenues by over €1.3 billion ($1.5 billion) and increases EBITDA by more than €500 million ($578.9 million).
On the side of Iberdrola, the company says the transaction aligns with its expectations to invest €55 billion ($63.7 billion) in its electricity transmission and distribution network subsidiaries, mainly in the US and the UK, which will almost double its regulated asset base to €90 billion ($104.2 billion) in the coming years.
The transaction, combined with the recently executed capital increase, secures the resources to meet these investment needs.
This strategy has already led Iberdrola’s British subsidiary, ScottishPower, to acquire the Electricity North West distribution company, which serves the northwest of England, just a year ago for €5 billion ($5.5 billion at the time).
DLA Piper advised Grupo Cox in the transaction, which is subject to obtaining the necessary regulatory approvals.
Originally published on Power Engineering International.
