Swiss investor Partners Group has bought a majority stake in Mexican gas transportation business Fermaca valued at approximately US$750 million.
Fermaca, which owns and operates gas pipelines and related energy assets in Mexico, has capacity to ship one-fifth of Mexico's natural gas needs, including supplies originating in the US.
Among Fermaca's key assets is the Tarahumara Pipeline, a 237-mile transmission pipeline in the Mexican state of Chihuahua, with an interconnection point at the US/Mexico border. Tarahumara has a 25-year contract with Mexico's state power company, CFE, to transport natural gas.
Another piece of Fermaca's portfolio is Tejas Gas de Toluca (TGT), a gas transportation company which also owns the Palmillas-Toluca pipeline in the Mexican state of Toluca. The TGT pipeline has a 10-year operating track record in one of the country's prime industrial regions.
Benefiting from the momentum generated by the recently approved Mexican Energy Reform, Partners Group and management are planning to invest and further develop the company in the coming months. Several initiatives are currently underway to grow the firms' operations in the US and in Mexico, improve its efficiency and prepare for the next growth phase of its expansion plan. New pipeline tenders are expected in the short term, to serve the industrial and the power sectors. Fermaca's know-how and track record uniquely positions it to benefit from the strong fundamentals underpinning the growth of the Mexican gas sector.Fernando and Manuel Calvillo Alvarez, founders of Fermaca, stated:
Jean Perarnaud, Managing Director in the Private Infrastructure team at Partners Group, added:
"Mexico will need capital investment of over USD 10 billion for natural gas infrastructure over the next 5 years to meet its targeted growth plan. With the abundance of projects planned, and the very favorable political and regulatory framework provided by the Reform, we find the current environment extremely attractive to continue building, owning and operating new gas infrastructure assets. We are excited to be partnering with Partners Group in this management buyout, a firm that shares our ambition and vision for our continued, sustainable growth and success."
"Our investment in Fermaca is an exciting addition to our portfolio as a core investment in energy infrastructure. Mexico's growing economy will be supported by increasing amounts of natural gas and Fermaca provides an opportunity to connect the abundant shale gas supply in the United States with the growing natural gas demand in Mexico. We are extremely impressed with the Fermaca management team and look forward to building a leading energy player in the region."
Milbank, Tweed, Hadley & McCloy LLP represented Swiss private equity firm in making this investment in Mexico's leading gas infrastructure firm.
Partners Group, the global private markets investment manager, announced in december 2013 that its Partners Group Global Infrastructure 2012 program, has closed at €1 billion, which made it the largest dedicated infrastructure vehicle ever raised by the firm.