CFE Fibra E returns to the market and seeks to raise up to USD 867 million for transmission

Mexico's Federal Electricity Commission (CFE) announced the start of meetings with investors to finalize a subsequent public offering of CFE Fibra E, which could reach $867 million, depending on market conditions. The operation aims to raise funds to strengthen and expand Mexico's National Transmission Network (RNT).

The placement includes a base issuance equivalent to approximately $580 million, with the possibility of increasing it through additional mechanisms. This is the vehicle's first capital issuance in the primary market since 2018, marking its return to this segment after almost nine years.

The initiative is part of the state-owned company's financial strategy to support the National Electric System Strengthening and Expansion Plan, which, according to the information released, includes almost 7 billion pesos of investment in transmission.

The goal is to mobilize national and international capital towards electrical infrastructure in a scenario of growing demand, driven by nearshoring, manufacturing activity and the expansion of the digital economy.

In an institutional publication about the announcement, it is highlighted that "electricity demand is growing, driven by nearshoring, manufacturing and the new digital economy," factors that increase the need for investment in networks.

In that context, CFE presents the operation as an instrument to finance transmission projects, facilitate the integration of renewable generation and contribute to the country's energy security.

An issuance of up to $867 million with international backing

According to the official statement, CFE Fibra E seeks to place up to approximately 451 million Energy and Infrastructure Investment Trust Certificates (CBFE).

The structure includes an option for additional placement of up to 30% of the base offer and an over-allocation mechanism of up to 15%.

With these instruments, the initial amount estimated at $580 million could increase to $867 million, subject to demand and financial conditions at the time the transaction is completed.

The company defines the initiative as "a historic issuance that will mobilize capital from the markets to strengthen and expand the transmission infrastructure."

One of the highlights is the interest of the International Finance Corporation (IFC), an organization belonging to the World Bank Group, which is considering acquiring up to $80 million in certificates during the offering.

This participation is still under evaluation, so it does not represent a confirmed investment commitment.

The proposal includes a public component in Mexico, subject to authorization by the National Banking and Securities Commission (CNBV), and an international component aimed at institutional investors.

The publication accompanying the announcement identifies among the objectives of the operation "the depth of our markets", through a structure designed to expand and diversify the vehicle's participant base.

To coordinate the placement, BofA Securities, Citi and Santander would act as global coordinators and, through their respective Mexican brokerage firms, as placement intermediaries in the national market.

Actinver, BBVA and Goldman Sachs Mexico would also participate in the local component, while BNP Paribas and Goldman Sachs would intervene in the international tranche.

The initiative also contemplates the possibility of incorporating individual investors through accounts in brokerage firms.

According to official information, for the first time since 2018, those holding these financial instruments will be able to participate in a new primary issuance of CFE Fibra E or increase their current positions. This mechanism expands financing options for electrical infrastructure through the participation of private capital and institutional investors.

The National Transmission Network, the cornerstone of the financing strategy

The resources obtained through the placement will be directed towards strengthening the National Transmission Network, infrastructure that allows electricity to be transported to the different consumption centers of the country.

In that sense, CFE identifies the grid as "the asset that sustains the entire economy," due to its role in supplying electricity to homes, commercial establishments, and industrial facilities.

The expansion of this infrastructure is relevant to support the increase in demand and facilitate the connection of new generation capacity, including that from renewable sources.

In addition to its operational importance, the company highlights the asset's financial characteristics and its ability to attract long-term investments.

The institutional publication notes that the RNT combines its strategic importance “with the financial soundness of an asset with regulated and predictable income.”

This feature is one of the central arguments of the proposal aimed at investors, which seeks to link infrastructure financing with the economic flows associated with the electricity grid.

Furthermore, the company maintains that "Mexico's electrical infrastructure can attract world-class institutional capital," referring to the interest it intends to generate among participants in the financial markets.

Regarding the management structure, CFE Capital plays a central role as the financial arm of the Federal Electricity Commission.

The entity manages CFE Fibra E, a vehicle that channels resources towards transmission infrastructure and seeks to consolidate itself as a financing instrument of the National Electric System.

According to the announcement, CFE Fibra E is the only financial vehicle with access to the RNT, a condition that determines its positioning within the state-owned company's capital raising strategy.

The operation also involves the CFE Corporate Finance Directorate, responsible for promoting, together with CFE Capital, the structuring of the process.

The institutional publication acknowledges the participation of both teams and highlights that their work makes possible “an operation of this scale and complexity”.

With the start of meetings with investors, the company is moving towards a possible placement in the coming days, although the final volume will depend on market conditions and the corresponding authorization process.

If finalized, the raising of up to $867 million will allow new resources to be channeled towards transmission projects, within the framework of the expansion plans of the Mexican electricity system.

CFE links this strategy to the goal of building a more robust network, facilitating the incorporation of clean energy, and responding to the supply needs of the productive sectors.

The publication concludes that the plan's progress aims for "a stronger, cleaner, and more reliable electricity system," while the company seeks to consolidate access to capital markets as a means of financing the national electricity infrastructure.