Actis LLP has agreed to buy the Mexican assets of InterGen, an acquisition that marks the London-based private equity (PE) firm’s first major foray into the local power and natural gas business.
The $1.27 billion deal, which involves power plants and natural gas infrastructure, is subject to regulatory approvals and is expected to close in 2Q2018, according to the companies.
InterGen has been active in Mexico for more than 20 years, mainly as an independent power producer (IPP). It is one of the country’s largest private operators of combined-cycle gas turbine (CCGT) plants, along with Iberdrola SA, Gas Natural Fenosa and Mitsui & Co.
Introduced in a partial reform of the energy market during the 1990s, the IPP model allowed private companies to build power plants in Mexico and sell their production exclusively to the Comision Federal de Electricidad (CFE), the state-owned utility. IPPs currently operate around 12,300 MW in Mexico, or about 17% of the total generation capacity, according to energy ministry data.
Under the 2013-2014 energy reforms, IPPs can choose to continue selling to CFE or migrate to the new legal regime and compete with other power plants in the recently established wholesale electricity market.
The Mexico assets in the Actis deal include 2,200 MW in operation with six CCGT plants and a 155 MW wind farm, the latter jointly developed by InterGen and Infraestructura Energetica Nova (IEnova), the local unit of Sempra Energy.
InterGen also owns and operates three natural gas compressor stations and a small pipeline. Two of the stations and the 65-kilometer (40-mile), 24-inch diameter pipeline are located in El Sauz, Queretaro state, in central Mexico.
The other compressor station is a 1.3 Bcf/d facility in the Gulf Coast port of Altamira, near one of Mexico’s three liquefied natural gas import terminals.
Globally, InterGen has 11 power plants in operation with a combined generation capacity of 6,284 MW, which also includes facilities in the United Kingdom and Australia. The company is jointly owned by the Ontario Teachers’ Pension Plan and China Huaneng Group/Guangdong Yudean Group.
PE-fueled Actis focuses on emerging markets and is active across Latin America, Asia and Africa. The company has investments in Central America, Chile and Brazil. In Mexico, it backs wind and solar developer Zuma Energia.