US private equity firm I Squared Capital agreed to buy a 49% stake in Brazilian renewable energy company Energia Órigo for $400 million.
The acquisition will be financed by I Squared’s global infrastructure fund III and its growth markets fund, which focuses on emerging markets in Latin America and Asia, company executives told LatinFinance.
Following the deal, which is expected to close by end March, the US firm plans to invest BRL6 billion ($1.2 billion) to develop Órigo and increase its renewables capacity to 2GWp within three years from the current 300MWp, the I Squared executives said.
Órigo is focused on small-scale solar energy distributed generation, a fast-growing sector in Brazil that benefits from various tax incentives.
The transaction will make I Squared the company’s biggest single shareholder, with a stake at least twice as large as other shareholders, the sources said. Other shareholders include Augment Infrastructure, TPG ART- Circularis Partners, Blue like an Orange Sustainable Capital, MOV Investimentos and Mitsui.
NEW OFFICE
The deal comes hot on the heels of I Squared’s opening of a Brazil office last month.
While the firm is present in 13 Latin American countries through a $3 billion regional investment portfolio, the Órigo acquisition represents its first direct investment in Brazil.
“There are more sporadic investment opportunities in other parts in Latin America,” one of the executives said, adding that power and telecommunications are the most attractive sectors.
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