Infrastructure Financing of the Year-Mexico: Energía del Valle de México II
SPONSOR: EVM/GE (EFS Global Energy)
LOCATION: Axapusco, Mexico
FINANCING TYPE & SIZE: $750 million project financing
BANKS: BNP Paribas, Citi, SMBC
LAW FIRMS: Shearman & Sterling, Paul Hastings, Creel, Ritch Mueller, Galicia Abogados
In 2017, GE and Energía del Valle de México reached an agreement to team up to develop energy generation projects in Mexico.
Late last year, a consortium led by the two companies finalized long-term financing for a greenfield natural gas-fired power plant, Energía del Valle de México II. The 850 MW combined-cycle plant is located in the Axapusco municipality in Mexico. The project is part of a broader modernization plan being carried out by Comisión Federal de Electricidad, Mexico’s state utility, to meet Mexico’s growing energy needs in the critical Mexico City and Guadalajara regions.
The financing included an impressive array of components — a $469 million project bond, a $125 million term loan and some $146 million in letters of credit. The hybrid financing also included a private placement with institutional investors to guarantee longer tenors, an approach gaining in popularity in Mexico. The sponsors tapped bank and private placements at the same time.
The bookrunners included Citi, SMBC, BNP Paribas and Bancomext. Milbank represented the four commercial banks, while Sherman & Sterling represented EVM II and Paul Hastings counseled EVM as the sponsor the deal.