Mexico’s state utility aims to raise about $1 billion next month for an investment vehicle to finance new transmission lines, as President Claudia Sheinbaum tries to attract private capital to expand the nation’s grid.

Comision Federal de Electricidad officials plan to meet with investors in New York City in early November, ahead of a possible offering of shares in CFE Capital before Thanksgiving, according to CFE Chief Financial Officer Eugenio Amador Quijano. It will be the country’s biggest cash equity offering since 2020.

CFE’s share sale will allow investors to get a stake in revenues from Mexico’s state-owned transmission lines. A lack of investments in Mexico’s power sector during the government of former President Andrés Manuel López Obrador has resulted in seasonal blackouts as a dearth of transmission infrastructure regularly strains Mexico’s grid during peak demand times. Since then, the country has been seeking to reinforce its electricity network to avoid recurring outages.

CFE Capital, which is similar to a real estate investment trust, had effectively gone dormant since its listing in 2018. Sheinbaum’s administration is reviving the vehicle and will seek to tap investors repeatedly to help finance an expansion of the grid as Mexico seeks to attract global investors into its power sector, Amador said.

“We are thinking of continuing to have follow-ons in the future,” he said in an interview at the utility’s headquarters in Mexico City. The CFE is also planning to list a trust backed by power plants in the coming years, he added. “The actual equity that’s in those assets, we need that back to reinvest in new assets.”The sale is set to be Mexico’s biggest equity offering since billionaire Carlos Slim’s construction company listed a real estate investment trust in February 2020, according to data compiled by Bloomberg. CFE’s listing is also expected to kick off a more active equity market next year, following a sluggish eight years for major listings.

Citigroup Inc. is planning to divest more of its remaining stake of its Mexican retail bank Banamex through an offering that could happen as soon as January, Bloomberg has reported, and bankers are pointing to a modest pipeline of companies that could follow.

CFE’s fundraising, which has also included tapping debt markets with a first-ever 40-year peso note, is part of Sheinbaum’s push to find workarounds to the constraints imposed by López Obrador’s nationalistic energy laws. The government has been reviving tenders for joint projects with private players. The reversal toward inviting private capital into the power sector has already sparked the biggest rush of global funds into Mexico’s energy sector since AMLO shuttered an opening to private capital last decade.

CFE intends to grow the grid by close to 7% during this administration, up from growth of no more than 1% during the previous eight years, according to Amador. About 60% of the transmission investment will come from public funds and about 40% from the private sector, which is driving the need for the fundraising. The transmission buildout is in addition to 32 gigawatts of projects that are planned through 2030.

“We cannot have the size of generation projects come into the grid without interconnecting them,“ he said. “We are being really prudent in terms of how we finance such an aggressive investment plan.” CFE Capital has posted the highest returns of Mexico’s real estate investment trust vehicles, but it trades at a steep discount to global peers, according to data compiled by Bloomberg. CFE originally raised 16.4 billion pesos ($880 million) when it launched the Fibra E in 2018, with about a third of that capital coming from foreign investors.

But CFE didn’t subsequently expand the transmission asset base or return to equity markets. Eventually, international investor interest and trading liquidity dried up, leaving ownership in the hands of Mexico’s pension funds.

Amador said Mexico is seeking to sell a third of the shares to foreign investors this time as well and said further follow-ons could support more active trading.

CFE’s plans foresee about tripling recent investment levels over the next two years in transmission, bringing the government in-line with BloombergNEF estimates for what the country needs to meet growing demand and accommodate new generation assets.

“With Fibra E, CFE has found a creative way to attract private capital toward transmission projects and give itself a chance to execute its ambitious expansion plan despite the budgetary constraints it faces,” said BloombergNEF research associate Stephan Mothe. “The real challenges will be sustaining those elevated investment levels over the long run and, especially, delivering the projects on time.”