E-CL Closes Equity Books

Chile’s Codelco has closed books on the sale of its 40% stake in power company E-CL, with the pricing set to be fixed this morning. The shares closed down 1.2% at CLP1,265.20 Thursday, which would imply a valuation of CLP536.4bn ($1.1bn) for the 424m shares state-owned miner Codelco holds. Investors and analysts expect strong demand for the asset, part of a set of planned privatizations included in the government’s earthquake reconstruction funding efforts. “There should be strong demand from local private and institutional investors and international investors, and they shouldn’t have a problem raising $1.1bn,” Tomas Gonzalez, equity analyst at Celfin tells LatinFinance. With plans for $1.5bn-$3.0bn in capex this year, it does not make sense for Codelco to hold on to its E-CL stake, he says, especially now that it has locked up a long-term power supply contract. France’s GDF Suez still holds a 52.4% stake in the power company, in addition to a 7.6% free float. Proceeds of the sale are marked for Codelco’s investment plans. LarrainVial and JPMorgan are managing the sale, which follows a 3-week roadshow.