(Reuters) – Spanish power company Iberdrola (IBE.MC) will seek to expand in the United States and take advantage of its green subsidies after announcing the sale of gas assets worth $6 billion in Mexico, Chief Financial Officer Jose Sainz said on Wednesday.
The sale significantly reduces the renewable energy giant’s exposure to Mexico, where its relationship with the government has been fraught, and gives it an opportunity to speed up growth north of the border.
“The United States is the country that brings more opportunities in the medium and long term,” Sainz told analysts in a conference call, referring to a massive package of subsidies included in the U.S. Inflation Reduction Act.
“Due to IRA, we will probably review our renewable plans in the U.S.,” he said, adding that the Mexican sale could also allow acquisitions.
Mexico remains a core market for the company, which aims to grow its renewables operations there, he added.
The sale is also expected to improve the company’s relationship with the Mexican government as most of the country’s regulatory problems are linked to the assets being sold, Sainz said.
“We are now almost free of any problem with the Mexican government,” he said.
Mexico’s president hailed his government’s purchase of 13 power plants from Iberdrola as a “new nationalisation” that will increase state control.
For Iberdrola, RBC analyst Fernando Garcia said in a research note it “got rid of the Mexican headache”.
The company “had significant problems with Mexican regulators and in our view, given that the valuation looks decent, it looks like a good deal for the company to deploy this cash in other areas,” Garcia said.
Iberdrola shares were up 2% in morning trade.
Sainz confirmed the profit target for 2025 of between 5.2 billion euros ($5.69 billion) and 5.4 billion euros, up from last year’s 4.3 billion, and said the dividend policy was unlikely to change much.