Latin America: Mexican renewable portfolio sponsor to raise USD 500m in debt

25 September 2018 - 12:00 am UTC

A joint venture led by French developer ENGIE is in talks with lenders for a long-term debt worth approximately USD 500m to fund a roughly 700MW renewable energy portfolio in Mexico, three sources briefed said.

Japanese company Tokyo Gas is understood to have recently joined ENGIE in an equity partnership that will develop renewable capacity in the country.

BBVA, Crédit Agricole and Natixis are three commercial banks part of the negotiations. Local lender Bancomext is among some export credit agencies (ECA) working on the deal.

Earlier this year, ENGIE was reportedly requesting proposals from lenders to fund a portfolio that contained two wind farms with a combined capacity of 147.5MW and four solar parks adding 606MW.

At the time, the French developer was in parallel seeking an equity partner for this portfolio and had mandated financial services firm Marathon Capital.

The sources did not comment on whether ENGIE had changed the projects inside this portfolio, or if it remained the same.

The structure of this transaction will be a complex and challenging but very interesting to work on, given the differences among the projects that integrate the portfolio, the three sources added.

The projects are backed by 15-year power purchase agreements (PPA) and 20-year clean energy certificates (CELs) awarded by energy authorities in the second and third renewable energy auctions in September 2016 and September 2017, respectively.

This is different from another portfolio that ENGIE sent to lenders in June requesting proposals to finance four greenfield projects, including three solar parks and a wind farm, backed by PPAs signed with private offtakers.

Projects from the second and third tender

In the second tender, Engie won PPAs and CELs for the 157MW Trompezón solar park, in the central state of Aguascalientes, and the 51.8MW Tres Mesas III wind farm in Güemez, in the northeastern state of Tamaulipas. The projects are slated to start operations in 2019.

Trompezón expects to receive MXN 196,006,834 (USD 10.7m) per year during the first fifteen years for energy supplied to the grid. Meanwhile, Tres Mesas III will receive MXN 159,888,545 annually during the same period. The wind farm also committed to make 21MW per year available at critical hours.

In the third energy tender, Engie won PPAs and CEL contracts for three solar projects and a wind farm.

The 95.7MW Tres Mesas 4 wind farm, to be developed near San Carlos in Tamaulipas, committed to make 30.6MW per year available. It expects to receive payments for MXN 153,139,081 per year, and it will require an investment of USD 119.6m.

The 99MW Abril 99 solar project, to be developed near Hermosillo in the northern state of Sonora with a price tag of USD 84m, expects payments for approximately MXN 116,121,778 annually.

The 200MW Calpulalpán solar project, near Tlaxcala in the state of Tlaxcala, will receive approximately MXN 198,754,285 per year, for an estimated investment of USD 170m.

The 150MW Villa Ahumada solar park in the state of Chihuahua has an estimated investment of USD 127.5m and expects to receive payments annually of MXN 157,996,597.

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