CFE Taps Private Equity Markets to Fund Mexico’s Grid Expansion
Comision Federal de Electricidad plans to raise approximately $1 billion in November through a share offering in CFE Capital, an investment vehicle structured to finance new transmission lines across Mexico. CFE Chief Financial Officer Eugenio Amador Quijano said officials will meet investors in New York in early November ahead of a possible offering before Thanksgiving. CFE Capital, which resembles a real estate investment trust and holds revenues from state-owned transmission lines, has been dormant since its 2018 listing. The sale would mark Mexico’s largest cash equity offering since 2020.
President Claudia Sheinbaum’s administration is reviving the vehicle to attract private capital into the power sector after years of underinvestment under former President Andrés Manuel López Obrador led to seasonal blackouts and strained grid infrastructure. CFE intends to grow the transmission grid by close to 7% during the current administration, compared to no more than 1% growth over the previous eight years. About 40% of the transmission investment will come from the private sector, with the remainder from public funds. CFE also plans to list a trust backed by power plants in coming years and expects to return to equity markets repeatedly for follow-on offerings.
The fundraising represents a reversal from López Obrador’s nationalistic energy policies that had shuttered private capital participation. Sheinbaum’s government has been reviving tenders for joint projects with private players, sparking renewed interest from global funds in Mexico’s energy sector. CFE Capital has posted the highest returns of Mexico’s REIT vehicles but trades at a steep discount to global peers. About one-third of the original 2018 offering came from foreign investors, though international interest later dried up, leaving ownership concentrated among Mexican pension funds.
CFE plans to sell roughly a third of the new shares to foreign investors and expects follow-on offerings to support more active trading. The utility plans to triple recent transmission investment levels over the next two years, bringing spending in line with BloombergNEF estimates for what Mexico needs to meet growing demand and accommodate 32 gigawatts of planned generation projects through 2030. Citigroup is expected to divest more of its stake in Banamex through an offering as soon as January, potentially leading a more active Mexican equity market after eight sluggish years for major listings.
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