Peru’s long-running political and economic turmoil is partly to blame for a slowdown in investment in the country’s infrastructure in recent years. Yet this backdrop hardly deterred global infrastructure investor Actis from closing a landmark acquisition in the country earlier this year.
The firm’s $1.39 billion purchase of a portfolio of clean energy assets owned by Enel Américas in March represented a critical milestone for Actis’ presence in Latin America.
The assets in question constitute the largest clean energy platform in Peru, with 13 solar, wind and thermal plants totalling 2,211 MWs of installed capacity, according to Citi. Actis subsequently rebranded the portfolio company as Orygen, the vehicle through which it plans to continue investing in Peru’s energy sector.
It marked a momentous investment in a market that has left investors cold in recent years. Actis, however, is no newcomer to the Peruvian market, having established its foothold there almost two decades ago.
When news broke that Enel was divesting its portfolio of clean energy assets in the country, Actis moved quickly. The firm had a prior relationship with the seller and could offer the credibility required to enter into a deal of such dimensions, says Nicolas Escallon, a partner in Actis’ Energy Infrastructure team.
“We see in Peru a regulatory environment that is very advanced relative to other emerging economies, and an energy sector that was privatized, has welcomed private investors for over 20 years and offers cash flows in dollars,” he says.
“Despite the political ups and downs in Peru and the region, the economy has continued to come along, macro fundamentals are great, and its management is very orthodox. So we were watching Peru very closely.”
The financial package was structured with Citi, JP Morgan, BBVA, Santander, Natixis, Goldman Sachs and BNP Paribas, and subsequently syndicated to a broader group of banks. According to Citi, it was the largest power non-recourse acquisition financing in the Andean region for the past several years. The deal itself was notable for an interest rate hedge, which allowed Actis to lock-in favorable financing rates ahead of closing the financing and completing the acquisition
Actis partner Alberto Estefan, also in the Energy Infrastructure team, adds that Orygen is well positioned to offer solutions to Peru’s electricity grid and end users alike by bundling cost effective and renewable, but intermittent, power with dispatchable gas power generation.
“On the back of that dynamic, we have a plan to invest over $1billion in new wind and solar assets through Orygen,” he points out. “We foresee that a company of this size and relevance will tap a diversified range of financing sources, and we plan to go to the debt capital markets relatively soon.”
Actis’ acquisition of Enel’s Peruvian Generation Portfolio
Target: Enel Generación Perú (92.35%) Acquiror/Sponsors: Niagara Energy S.A.C / Actis
Joint Lead Arrangers: BBVA; BNP Paribas, Citigroup; J.P. Morgan; Natixis; Santander
Arranger & Financial Advisor: Goldman Sachs
Sponsor’s Counsel: Milbank (NY); Garrigues (Peru)
Lenders’ Counsel: Paul Hastings (NY); Estudio Echecopar (Peru)
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