Exclusive: Iberdrola’s Sale of Mexico Power Plants to Close In December

Banobras’ CEO Jorge Mendoza Sánchez tells Bloomberg Línea the financial vehicle to be used for the transaction will be a capital development certificate

The deal, announced in April, totals $6 billion.
November 17, 2023 | 12:35 PM

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Mexico City — The sale of 13 Iberdrola power plants to the Mexican government will close in December, Banco Nacional de Obras y Servicios Públicos’ (Banobras) CEO Jorge Mendoza Sánchez has revealed to Bloomberg Línea.

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The representative of the development bank said that 20% of the capital portion is already deposited, and said he is overseeingthe closing of the financing for the operation.

“The goal is to close it in December,” he said.

Barclays Latin America president and CEO Raul Martinez-Ostos had told Bloomberg Línea that authorization from the country’s regulators for the sale was still needed.


In April 2023, Iberdrola announced the sale of 13 power plants to the Mexican government for $6 billion, an operation that will be financed mainly by the finance ministry through the National Infrastructure Fund, development banks such as Banobras and Nacional Financiera and Bancomext, and private banks.

Mendoza Sánchez explained that the Government is reviewing the last link of the first phase, the debt.

Regarding the delay in the closing of the operation, he said that there was a review of assets with legal and technical advisors.


CKD, the financial vehicle for the transaction

The private fund México Infrastructure Partners (MIP) will be the administrator of the financial vehicle for the capital to be contributed by private institutions.

“First we focused on the equity and investment instrument, which is a CKD, a capital development certificate, and now we are focusing on the financing where commercial and development banks will participate”.

CKDs are negotiable securities in the Mexican Stock Exchange destined to finance productive projects in the country that have allowed retirement funds to finance diverse projects.

The head of Banobras said that the participation of retirement funds will be in phase two of the project when they place the financial vehicle of the CKD.


“It is a very attractive asset, very profitable, and the goal is to sell them 49% once the closing is done,” he said.

The operation has been described by Mexican President Andrés Manuel López Obrador as a “new nationalization” of the electricity sector, although the state-owned power utility CFE will only be the operator but not the owner of the power plants.

Banobras, a state-owned company in development banking, aims to finance or refinance public or private investment projects in infrastructure and public services.

Mexico’s CFE Will Be Operator, But Not Owner, of Power Plants Bought from Iberdrola