Mexico's Fibra-E channels a new wave of infra finance
February 21, 2018 |
As the election looms, state-supported entities CFE and GACM chart equity investors to meet future investment needs
Mexico's energy infrastructure sector has entered a new financing phase after CFE unveiled its long-awaited Fibra-E.
The state-run electricity company's MXN16.4bn ($879m) deal saw it reach a new group of investors from home and abroad. Shortly after CFE issued the Fibra-E, the airport operator Grupo Aeroportuario de la Ciudad de Mexico (GACM), filed documents for its own.
It has been a long time coming, according to David Plascencia the deputy CFO at CFE. Speaking at a LatinFinance Roundtable in Mexico City, he said the equity issue was two years in the making.
"It was very difficult... We had to implement some fiscal reforms and create a trust to isolate the revenues [from the Fibra-E]," Plascencia said.
The utility priced the shares, or certificates, at MXN19 each, the low end of a suggested range. Despite filling the orderbook, Plascencia said a choppy week in the capital markets led CFE to price the stock at the low end.
"We had to deal with the volatility of the week, but the real challenge will be the drop down in the secondary market," he said. "This is a long-term vehicle."
The buy-and-hold nature of the stock may impact the certificates in secondary trading, but Plascencia said the shares were up as much as 4% since going public. Shares in CFECapital, the names of the Fibra-E trust traded at MXN19.87 each on Wednesday morning.
For GACM, the Fibra-E marks the next stage in obtaining its funding requirements, following $6bn in bond sales.
GACM CFO Ricardo Dueñas said the equity vehicle will be structured to protect investors from potential market volatility. It will also feature amortizable shares, which will pay dividends from 2021, either through Mexico City's existing international airport or the new facility, currently under construction.
"The structure will give a preferred rate of return to the investors... Once the trust hits that target rate, it will amortize," Dueñas said.
The Fibra-E vehicle also serves as a tool for Mexico's domestic investor base. The country's pension funds, or afores, are hungry for long-term assets and Dueñas sees the airport operator's equity vehicle as a means of putting local investors' money to work.
"It is still a relatively new vehicle that channels pension funds into infrastructure," he said. "We want to match the long tenor of the asset with long-tenor money, or pension money."
The state-owned energy company Pemex is also advancing its own Fibra-E, according to Victor Luque, managing director of SOEs at the Ministry of Energy (Sener). Speaking at the same roundtable, Luque said Pemex could file documents as early as this year.
"If not before the election, then it could be early 2019," he said. "You have brownfield stable cash flows and plenty of money in the pension funds investing in a conservative way... This is an opportunity to invest in risk-return projects like Fibra-E."