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Sancus & Santander Launch Mexican Renewable Energy Initiative

By Cas Biekmann | Tue, 11/23/2021 - 16:53

Capital fund Sancus has launched two investment vehicles that aim to raise US$225 million in an effort cooperating with global bank Santander’s Asset Management arm. With the funding, the vehicles aim to invest in Spanish renewable energy projects by creating a link toward Mexican capital.

The financial players´ objective is to create a new clean energy-focused power producer, said Sancus’ partner, Borja Escalada. The vehicles created for this purpose, called Sancus Green Investment I and Sancus Green Investment II, are open to investors coming from all areas, including institutional funding. What makes the vehicles unique is that they aim to tap into Mexican capital in order to fund Spanish renewable power projects. This makes it effectively a reversal of the status quo established after President Peña Nieto’s 2014 Energy Reform, where much of Mexico’s budding renewable energy development was driven by Spanish capital and expertise.

Santander will contribute US$22.5 million to the project, whereas Sancus has obtained commitments worth US$67.6 million. “The investment will be mainly in photovoltaic solar,” said Escalada, pointing toward the purchase of Gransolar’s 500MW Spanish pipeline portfolio, which is “ready to build”.

Escalada furthermore explained how the vehicles differ in their financial approach, which will not resort to debt and with Sancus functioning as the only shareholder. “For most of the projects, we aim to go to market,” said Escalada, meaning that the projects would operate on a merchant basis and not seek backup in the form of previously signed long-term power purchase agreements (PPAs). This is made possible because of renewable energy’s inherent competitiveness, according to the companies.

For Sancus, the new approach is a way to diversify its assets. The capital fund has already invested around US$800 in Mexican renewable energy assets, as well as significant amounts toward urban development projects.

Earlier this year, financial information company Euromoney recognized Santander as the “Best Bank in Sustainable Finance” and “Best Bank for SMEs in Latin America”, as well as “Best Investment Bank in Mexico”. The bank wants to become net zero by 2050. “Climate change is a global emergency. We are one of the largest banks in the world, with 148 million customers. That is why we have the responsibility and the opportunity to support the green transition and encourage more people and companies to be more sustainable. Much remains to be done, but the commitments we announced today are a great progress,” said President of Santander, Ana Botín, highlighting the bank’s commitment to sustainable investments. 

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Cas Biekmann Cas Biekmann Journalist and Industry Analyst