Iberdrola sells 78% of its business in Mexico after López Obrador's regulatory problems

Less political pressures with Andrés Manuel López Obrador and higher multiples of what the business is worth in the country. This is the strategy outlined by Ignacio Sánchez Galán in the sale of 78% of Iberdrola's business in Mexico for 5,000 million euros to the state fund México Infraestrucutre Partners. A figure that could undergo variations with the closing of the deal scheduled for the end of the year and will represent a "significant" capital gain.  

The deal will allow the Aztec state-owned company to acquire 8,539 megawatts (MW) of already installed capacity, mostly gas combined cycle and 103 MW of wind power. The deal, which is supported by the Mexican government through Mexico's National Infrastructure Fund (Fonadin), has been described by the Mexican president as "a nationalisation".  

The sale has been received in the financial market with presumed rises for Iberdrola. The company avoids the lack of liquidity in the market, the regulatory problems and the political risk projected by López Obrador's presidency. The Mexican president has even made insinuations of corruption about the company after assuring that he had received favourable deals with former presidents.   

However, the recent resolution has smoothed things over. "The agreement reached with Iberdrola, which allows progress to be made in the implementation of Mexico's new energy policy, marks the beginning of a new stage in which the company will effectively participate in the country's renewable development", AMLO defended.  

This complicity was reaffirmed by the company's chairman, Ignacio Galán, after a meeting at the National Palace: "Iberdrola is grateful for the support and flexibility shown by the Mexican government to reach this agreement, and considers Mexico a strategic country with potential for growth and expansion where it will show its support for Mexico and the state by developing renewable capacity".  

The sale also plans to comply with Iberdrola's 2023-2025 strategy, in which the electricity company intends to experience growth in networks and renewables with opportunities in the United States and Europe, as well as improving debt ratios and strengthening the company's financial positioning. The group's chief financial officer, José Sainz, said: "In the short term, this agreement gives us new opportunities to accelerate growth in Europe and the United States, but we remain committed to Mexico and Brazil".  

Despite the sale of 78% of its business in Mexico, Iberdrola continues to be the leading private generator of renewable energy in the country.