Iberdrola to Exit Mexico

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Iberdrola to Exit Mexico

Cox Abg Group SA has agreed to buy Iberdrola SA’s remaining Mexican assets, including over 2.6 gigawatts (GW) of installed generation capacity, for $4.2 billion. The divestment includes 15 operational power plants, consisting of about 1.37 GW combined-cycle and co-generation and around 1.23 GW wind and solar, according to separate statements by the Spanish companies […]

Cox Abg Group SA has agreed to buy Iberdrola SA’s remaining Mexican assets, including over 2.6 gigawatts (GW) of installed generation capacity, for $4.2 billion.

The divestment includes 15 operational power plants, consisting of about 1.37 GW combined-cycle and co-generation and around 1.23 GW wind and solar, according to separate statements by the Spanish companies Thursday.

“It also includes the largest qualified user supplier in Mexico, with a 25 percent market share and more than 20 tWh distributed across over 500 large clients”, said Seville-based Cox, an integrated energy and water utility.

Cox plans to put into operation additional projects initiated by Iberdrola in the Latin American country.

“As these projects are completed, the buyer would make payments to Iberdrola in addition to the agreed $4.2 billion”, Iberdrola said.

Iberdrola’s workforce of over 800 professionals in Mexico will transfer to Cox, Cox said.

In February 2024 Iberdrola said it had sold more than half of its Mexican presence to a trust led by Mexico Infrastructure Partners for approximately $6.2 billion. The sale included 13 mostly gas-fired combined-cycle generation plants with a total installed capacity of about 8.64 GW.

Iberdrola said at the time it was retaining a renewables portfolio of over six GW in Mexico.

On Thursday, it said the sale of its remaining Mexican operations to Cox “responds to expectations of organic investment of EUR 55 billion in transmission and distribution electricity networks in its subsidiaries in the U.S. (Avangrid Networks), the UK (ScottishPower Energy Networks), Brazil (Neoenergia) and Spain (i-DE), which will almost double its regulated asset base to EUR 90 billion in the coming years”.

“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 EUR 5 billion”.

Iberdrola expects to execute the EUR 55-million investment plan in its network business between 2026 and 2031. The plan targets “markets with stable and predictable regulatory frameworks”, Iberdrola previously said.

Under its current three-year plan (2024-26), Iberdrola eyes to invest EUR 41 billion, including expected contributions from partners.

“The electrification of energy is unstoppable and will expand exponentially in the years ahead, supporting decarbonization, boosting energy security, and reducing the volatility caused by fossil fuels”, Iberdrola executive chair Ignacio Galan said in a statement March 21, 2024, for the company’s announcement of the plan.

“Our strategic pillars focus on networks, geographical diversification, and a balanced energy and customers mix”.

Eighty-five percent of the 2024-26 gross investment is allotted for Iberdrola’s A-rated markets. Of this allocation, 35 percent is for the U.S., 24 percent for the UK, 15 percent for Iberia, 15 percent for Latin America and 11 percent for Australia, France, Germany and others.

The three-year plan includes EUR 15.5 billion of gross “selective investment in renewables”, over half of which would go to the U.S., the UK, France and Germany.

For Cox, “Mexico stands as the second most important electricity market in Latin America, supported by solid macroeconomic fundamentals and an investment-grade economy underpinned by a responsible fiscal policy”, Cox said.

“The country offers vast potential for increased penetration and growth in the power sector, bolstered by a sound and stable banking system. Moreover, a rising demand for energy is driving the need for substantial investment.

“With an established presence in the Mexican market for several years, Cox is strategically positioned to manage Iberdrola’s platform in Mexico and capitalize on the growth opportunities in this strategic market.

“The deal creates significant synergies for Cox within its strategy to make Mexico one of its key business hubs in Latin America by integrating water and energy solutions”.

The Iberdrola acquisition will count toward Cox’s plan to invest $10.7 billion in Mexico between 2025 and 2030.

Cox’s Mexican investment plan also includes “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”, Cox said. “Additionally, Cox plans to co-invest in new generation projects alongside CFE”.

“With this acquisition, Cox completes its strategic plan three years ahead of schedule, initially set for the 2025-28 period”, Cox said. “The company is now expected to close 2025 with pro forma revenues of approximately EUR 3 billion and EUR 750 million in EBITDA”.

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