Colombia Aims High on Isagen Privatization

Colombia has revived plans to privatize electricity generator Isagen, hoping to draw at least COP4.479trn ($2.37bn) from the sale of its 57.66% stake by offering its shares at more than COP100 higher than market value. Finance minister Mauricio Cardenas said Monday the time was right to sell the government’s holding of 1.57bn shares, because the company was solid, efficient, and Colombia’s electricity generation industry was mature. The government will put the proceeds towards funding infrastructure projects. The minimum price is set at COP2,850 a piece, but the government will auction shares among “recognized strategic investors” in a bid to find a higher price, it said in a statement. Isagen’s shares closed at COP2,725 Monday. The deal comes at a strong point for the company, as it prepares to launch a major hydroelectric project next year, said Omar Escorcia, analyst at Asesores en Valores. But another analyst said the government would struggle to sell its stake so far above the market value. The minimum price equals 12.5 time projected 2014 Ebitda, the finance ministry said on its website. Privatization of Isagen has been on the cards for a long time. In 2009, the sovereign mandated Credit Suisse and Inverlink for the deal. Then, the government hoped to raise around COP3trn, with the company’s shares trading at COP1,820 each.