Milbank, Tweed, Hadley & McCloy has represented Swiss private equity firm Partners Group in making a majority investment in Mexico’s leading gas infrastructure firm, valued at approximately USD750m.
Partners Group is acquiring a majority stake in Fermaca, which owns and operates gas pipelines and related energy assets in Mexico.
Fermaca pipelines have capacity to ship one-fifth of Mexico’s natural gas needs, including supplies originating in the US.
Spurred by Mexico’s recent initiatives easing restrictions on foreign investment in its natural resources, Partners Group says it expects Fermaca to expand its gas transmission activities.
Based in Zug, Switzerland, Partners Group bought out a previous investment in Fermaca by New York asset manager Ospraie Management. Fermaca’s senior management team is investing alongside its new partner. The buyout is being funded through a combination of equity and debt.
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.
“We are thrilled to be representing Partners Group in its first major infrastructure investment in Latin America – it could not have come at a more opportune time, or with a more strategic,” says Milbank project finance partner Carolina Walther-Meade, who co-led the deal team along with corporate partner John Franchini. “The government of Mexico has made a serious commitment to partnering with international players in growing its energy sector, and this transaction is a perfect reflection of that promise, especially with the active role played by Fermaca’s senior management team in leading the buyout alongside our client. Fermaca is extremely well positioned in serving Mexico’s energy needs, and its new backing by Partners Group assures its prominence in a continued build-out of the country’s large-scale energy infrastructure.”
