Cox Energy: First Solar Company in Mexican Stock MarketBy Cas Biekmann | Thu, 07/02/2020 - 16:05
On June 1, Forbes reported that global renewables company Cox Energy saw potential in Mexico’s stock market. Betting on the Mexican Institutional Stock Market (BIVA), the company sought to become the first solar company to be listed in a Latin American stock market with its Mexican subsidiary. Cox made good on this promise with an IPO on July 1 for up to MX$26.4 million (US$1.18 million) worth of shares.
El Financiero reported shares come with an overallotment option, to raise resources for MX$1.15 billion (US$51.2 million), according to the prospectus. In June, CEO of Cox Energy America Enrique Riquelme revealed what drove the company’s decision in an interview with Forbes. He mentioned that Mexico’s excellent solar radiation, expected growth in energy demand and existing volume of solar energy were strong motivations for Cox Energy’s subsidiary, aptly named Cox Energy Américas.
Cox Energy has extensive plans with the money it hopes to acquire through the listing, aiming to focus the capital on their 2020-2024 business plan. The first stage consists of divesting large solar projects with an equivalent of 2GW out of its portfolio. Stage two is the core of the plan, with which Cox Energy seeks to consolidate and operate small and medium solar projects totaling 1.4GW. Of these, 600MW will be located in Mexico. The rest will be situated in Chile, Colombia and other parts of Central America. The solar energy will be marketed through PPAs and in the Wholesale Electricity Market.
“The entire Cox strategy is focused on local, regional consumption,” Riquelme said. With this strategy, Riquelme aims to locate its projects in areas where high energy prices can be obtained and grid congestion can be avoided. Riquelme does not see the current controversies between the public and private sectors in Mexico as inhibiting to the company’s plans, although he did note Mexico’s transmission network as a particular point of concern. Multimillion-dollar investments on transmission are needed so that renewable energy can be correctly incorporated. He argues that the topic is complicated, recognizing the government’s views as partially correct but stressing that there are many more nuances at play, such as the inherent design of the long-term energy auctions. Furthermore, companies in the Mexican market pay up to four times more for transmission costs than what companies in Europe pay.