Valia Energía has already set itself apart in Mexico’s energy sector, despite its relative newcomer status.
A portfolio company of global private equity fund manager Actis, Valia Energía got its start in November 2022 with the acquisition of five combined cycle power plants and a gas pipeline. It acquired two additional plants in July 2023. The two portfolios gave it 3.2 gigawatts of generation capacity, making it one of the largest private energy generation companies in Mexico.
According to Narciso de Carreras Roques, the company’s CEO: “Valia, since its creation, has set out to provide reliable energy to meet Mexico’s increasing demand for electricity.”
Valia most recently shook up the market in January 2024 with its $530 million, 15-year bond with a 7.875% coupon. The orderbook, with demand from over 185 accounts, was 5.5 times oversubscribed, with substantial spread tightening during the roadshow. It was the first project bond by a Mexican issuer so far this decade and the first international bond offering by a first-time Mexican issuer since 2021.
This innovative portfolio financing transaction, which wins Bond of the Year in the 2024 Project & Infrastructure Finance Awards series, will contribute to expanding Valia Energía’s significant footprint in the Mexican energy market and consolidate its position as a top independent power generators in Latin America.
De Carreras says the company decided to go to the market for a number of reasons, including to pay down debt incurred through its initial acquisition, or Sunset Portfolio, and to extend the life of the debt to match its long-term contracts.
Valia sells its power to the state-owned Federal Electricity Commission (CFE), with power purchase agreements for all of its plants and a take-or-pay agreement for its 58-kilometer pipeline. The longest power purchase agreement, which extends through 2041, is for its largest asset. It extends two years beyond the bond’s tenor.
“We wanted to transform our short-term structure into a long-term, investment grade vehicle. I would say that we were right on the mark, because of the participation of more than 100 institutional investors from around the world who took part in the bond,” De Carreras says.
“We have long-term contracts in dollars and indexed to inflation that are with a trusted off-taker. The market understood this,” he adds.
The bond received investment grade ratings from S&P Global Rating (BBB) and Moody’s (Baa3).
De Carreras expects the company’s fortunes to continue improving because of the geographic location of Valia’s assets and the anticipated spike in demand from nearshoring and other motors of industrialization. Valia’s plants are in the northeast and center of Mexico, where energy demand is five times what it is in the rest of the country.
He says that Valia will be ready to provide energy for nearshoring and that its installed capacity and technology are also a guarantee for renewable solar and wind power that Mexico is adding.
An added benefit, according to De Carreras, is the fact that its plants include GE, Mitsui and Siemens technology, allowing it to remain on the cutting edge and to continue to contribute to Mexico’s energy transition based on natural gas and renewables.
The Sunset Portfolio from 2022 included three 495MW combined cycle plants, one 247.5MW plant and a 500MW plant. It also included the 58-kilometer pipeline with a capacity to move 410,000 million BTUs per day.
The Sunrise Portfolio from 2023 included the 850MW combined plants and a smaller plant with 100MW of capacity.