Chile Targets $1bn-Plus Aguas Block Sale

The government of Chile could raise more than $1bn today when it is scheduled to sell a 30% stake in water utility Aguas Andinas. The government’s Corporacion de Fomento de la Produccion (Corfo) is selling up to 2.14bn of shares to the public, meaning a CLP556.4bn ($1.19bn) deal at Tuesday’s CLP260 closing price. If all are sold, the government would be left with just a 5.0% piece, though this position includes class B shares that would allow it to retain certain veto powers in major decisions going forward. Books were due to close yesterday, with pricing to be announced this morning. “It’s a quasi-bond,” says an equities analyst, citing a dividend yield of more than 8% and a stable business model. Banchile, Bank of America Merrill Lynch and IM Trust are managing the sale. Andinas is 50.1% owned by the Inversiones Aguas Metropolitanas (IAM) vehicle, which is in turn 56.6% owned by Spanish water utility Agbar, which is controlled 75% by France’s GDF Suez. Suez had been heard looking to increase its stake in Andinas through the offer. Privatized in 1999, Andinas provides waste and water services in Chile through six subsidiaries. The government got approval late last year for the sale. This follows January’s $1bn sale of 40% of utility E.CL and is part the government’s plan to meet increased financing needs following last year’s earthquake.