AVAIO Capital has brought in Tortoise Capital Advisors to invest in a $2.7 billion natural gas export terminal project in Mexico.
The two firms are taking an 80 percent equity stake in the first phase of development of the Mexico Pacific Limited export facility. It will be built on Mexico’s west coast around 100 miles south of the US border, according to Mark McComiskey, a founding partner at AVAIO.
AVAIO, a New York-based firm investing in greenfield infrastructure projects in North America, is managing Tortoise’s interest through a special purpose vehicle, McComiskey told Infrastructure Investor. He declined to disclose how much equity each of the firms had committed.
DKRW, Mexico Pacific’s developer, and engineering giant AECOM, which AVAIO spun out of earlier this year, also have stakes in the project. Mexico Pacific’s cashflows will be secured through toll contracts and a user fee that shipping companies pay to convert natural gas into LNG for transportation and storage. According to McComiskey, this financing structure will decrease commodity risk.
Mexico Pacific began development over a decade ago as an import facility, McComiskey explained. Around six years ago, during the shale gas revolution in North America, plans shifted for Mexico Pacific to instead be an exit point for LNG tankers heading to Asia.
“Our strategy is to bring new infrastructure into existence,” McComiskey said. “A west coast LNG export terminal like Mexico Pacific will provide a cheaper shipping cost to Asia and will avoid the complications and delays of shipping tankers through the Panama Canal.”
Construction on the project will begin next year with port operations expected by 2024.
AVAIO is currently raising its inaugural infrastructure fund, which is targeting $1 billion and is expected to reach final close early next year. The firm’s strategy is to invest in the construction of new infrastructure projects and redevelop existing ones. It will focus on sectors including water, transportation, digital and low-carbon energy.
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