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MIP

MEXICO - Finance

Gerardo Colosio

Partner & COO, Mexico Infrastructure Partners (MIP)

Bio

Gerardo Colosio is the COO of MIP, responsible for the structuring, issuance and operation of MIP investment vehicles, as well as the relationship with investors. He has been part of MIP since its inception in 2012. In the last 10 years, he has structured and issued six funds and two Fibra Es totaling USD3.1 billion and has led re-openings and additional series of such funds.

"We are aware that Mexico’s electricity generation over the coming year will be huge; however, it is not just a matter of generating energy, but of wider transmission capability."
With a diverse portfolio spanning infrastructure, energy, and telecommunications, MIP plans to further consolidate platforms, expand internationally, and diversify its investor base.
Why did MIP decide to invest USD6 billion to acquire Iberdrola’s plants in Mexico?

We are aware that Mexico’s electricity generation over the coming year will be huge; however, it is not just a matter of generating energy, but of wider transmission capability. Global funds are focusing on renewable energy, where in Mexico this is mainly wind and solar. We cannot give investors the full benefit of our operations if we focus solely on renewable energy because we need a solid base of clean energy. And that is the combined cycle with natural gas, capable of delivering energy to clients 24/7. Renewable energy is only available 30% of the day. A combined cycle base allows us to offer everything while giving the best benefit to our investors: Mexico’s workers. We expect the closing of the acquisition of the 12 combined cycle electric generation plants and a wind farm plant by February 2024. Of the total investment amount of USD6 billion, capital represents 40%, and the remainder will come from debt. The capital will come from our last close-ended fund, FIECK.

Will MIP operate these plants as well?

Yes, we have two levels of operations. A level where we fully operate contracts, energy sales, and natural gas contracts, with our specialized team. Then, we have the worker’s operations, which are done with international companies such as Naes, Ethos, and Vestas, to name a few. We cannot focus on producing 100% renewable energy in Mexico because that will not give us the capacity to provide energy to all industrial and residential areas. Electricity generation has seen greater demand with the advent of nearshoring. Another important factor is transmission. In Mexico, this is function is a monopoly of CFE, though we believe the next government will have a more progressive approach to this.

How diversified is your portfolio?

We have five funds in the market: EXI 1, EXI 2, EXI 3, EXI Latin America, and a private fund in Colombia with Colombian investors. Those five funds are closed ended, and we have two evergreen funds, which are two FIBRA-Es on infrastructure and energy. We have water treatment plants in Jalisco and two aqueducts in Querétaro. We also have telecommunications towers and fiber optic and DAS systems. In 2023, we closed a co-investment deal with French group Ardian to acquire MXT, and our strategy for the year is to consolidate our platforms, where telecommunications with MXT provides a good example. Then, we have toll roads in Mexico through FEXI, a FIBRA-E. We also have six airports in Colombia under a single license, and this year we are considering potential participation in another airport in Colombia and to seek further consolidation within this aviation sector. We also have a thermal generation plant in Colombia and a minor participation in a container port. In Mexico, we have a minor participation in the Mayakan pipeline that transports natural gas from Tabasco to Yucatán. We also have two solar generation plants in Zacatecas and Chihuahua. We administer USD3.7 billion in assets, of which USD1.2 billion is accounted for by roads alone, not yet considering the Iberdrola deal.

What are MIP’s next steps to consolidate its platforms in Mexico?

We divide our asset management into platforms by sectors and sub-sectors, and each one has dedicated staff that is 100% to that specific platform, especially in asset management and generating new projects. Another step is to diversify our investor base toward international funds. Furthermore, to increase investor benefit, we want to grow in infrastructure and combine our infrastructure capacities in a specific fund for developments in areas of the country that are overlooked. Also, we have always been fully transparent with our investors regarding our investments, and our new endeavors, reporting according to the law. The next stage is to be more transparent toward the public and make our acquisitions more public.

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