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Valia Energia offering reopens Mexico project bond market
Deal worth US$530 million to help consolidate firm’s position as one of top ten independent power generators in Latin America
Michael Marray 31 Jan 2024

Valia Energia, Mexico's largest private energy generation platform, has issued the first project bonds in the country since 2020, raising US$530 million.

Buffalo Energy Mexico Holdings, Buffalo Energy Infrastructure, and Buffalo Energy were co-issuers of the bonds, and also signed a related working capital facility.

Milbank advised Valia Energia, which is a portfolio company of London-based private equity fund manager Actis. The Mexican energy firm has a total commercial capacity of 3.2 gigawatts distributed among seven gas-fired power generation plants.

The 7.875% senior secured notes are due in 2039. The offering was led by BNP Paribas Securities Corp, Citigroup Global Markets, J.P. Morgan Securities, Morgan Stanley, and SG Americas Securities. Clifford Chance acted as legal counsel to the arrangers.

The portfolio financing transaction will help in expanding Valia Energia’s footprint in the Mexican energy market, and in consolidating its position as one of the top ten independent power generators in Latin America.

“As the first project bond in Mexico since 2020 and the first offering by a Mexican first-time issuer since 2021, this financing is not just significant for the company, but the broader energy market in Mexico,” says Marcelo Mottesi, chair of Milbank's corporate finance and securities practice and co-head of the firm’s Latin America group.

In November 2022 Actis completed the acquisition of MT Falcon from a consortium including Mitsui & Co, Tokyo Gas, JERA, and Tohoku Electric Power. The business was re-branded as Valia Energia. MT Falcon owned and operated five combined-cycle gas turbine power plants in Mexico with a total capacity of 2.2GW, and a natural gas pipeline.

The investment was funded through Actis Energy 5 Fund, which has US$6 billion of investable capital. The acquisition of the buy-and-build power platform followed similar deals by Actis across the Americas.  

In July 2023 Milbank advised Valia Energia on the acquisition of EVM, an energy portfolio that generates electricity from natural gas. The integration of EVM added two advanced natural gas-powered plants to Valia's portfolio. The acquisition included the purchase of GE Energy Financial Services’ 40% stake in EVM II, a combined cycle plant with an installed capacity of 850MW.

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