Italy’s biggest utility Enel completed the sale of its equity stakes in two Peruvian assets for $3.1 billion to China Southern Power Grid International (CSGI) last June in a deal 14 months in the making that marked one of the largest cross-border deals in Latin America in 2024 – and the largest M&A in Peru since 2020.
The deal, which wins Cross-Border M&A Deal of the Year for its size, complexity and significance, was part of Enel’s divestment of its assets in Peru, with CSGI acquiring its distribution company, now called Pluz Energía, and a management unit, Enel X. Enel’s power generation assets were acquired by Actis, an investment firm, in a separate deal.
The deal “demonstrates significant interest by international investors in the power and utilities sector in Peru,” says Juan Carlos Arribas, chairman of J.P.Morgan Peru. Enel’s power distribution system is the largest in Peru, covering more than 1,600 square kilometers and providing electricity to more than half of Lima’s 10.3 million people.
Bruno Amiel, a partner at Miranda & Amado, the law firm that advised CSGI, says the transaction represented “a big milestone, with a Chinese investor coming into a relevant market through a complex deal that continually changed throughout the process.”
The transaction involved multiple jurisdictions, including Chile, the UK and US, in addition to China and Peru. It was announced in April 2023, but only closed in June 2024 because of lengthy legal reviews required by regulators in Peru and China.
“The transaction started with a competitive bidding, then the direct acquisition, tender offer, reps and warranties agreement, which is not very common in Peru, and approval by the regulators. It was a very long transaction,” Amiel says.
In its December 2024 evaluation of the parent company, CSG, that reaffirmed the firm’s A+ rating, Fitch Ratings stated that “the acquisition will support CSG’s business profile, as the assets generate mostly regulated earnings with no exposure to volume or price risk under Peru’s strong regulatory framework.”
CSGI’s acquisition was the third major transaction by a state-owned Chinese firm in Peru in the past five years. It followed China Three Gorges’ $1.39 billion purchase of the Chaglla hydroelectric plant from Brazil’s Novonor (formerly Odebrecht), which closed in 2019, and the $3.59 billion acquisition by China Yangtze Power of Luz del Sur from U.S.-based Sempra Energy. Luz del Sur distributes power to the southern half of Lima. It also generates electricity.
While the Luz del Sur deal was slightly bigger than CSGI’s transaction, Enel’s full divestment, including the sale of the distribution and generation assets bought by Actis, came in at $6.1 billion. According to JP Morgan, which was exclusive financial advisor to Enel, the combined deal was the largest power generation transaction in Peru and one of the largest M&A transactions in Peru ever across all sectors.”
In addition to energy, Chinese firms have a growing presence in Peru’s mining and infrastructure sectors, including a November 2024 inauguration of the new Port of Chancay, South America’s first greenfield port in years, built and operated by Cosco Shipping.
Financial advisors: JP Morgan; Morgan Stanley
CSGI’s Counsel: A&O Shearman; Miranda & Amado
China EXIM’s Counsel: King & Wood Mallesons; PPU
Lender to CSGI for the acquisition: The Export-Import Bank of China
Enel’s Counsel: Hogan Lovells; Rebaza, Alcázar & De Las Casas
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com