Italy’s Enel is continuing its M&A push in Latin America.
The largest utility company in Europe said it has agreed to spend €150m ($175m) for a minority stake in Ufinet, a fiber optic network operator in Latin America, following the acquisition earlier this month of the largest power distribution company in Brazil.
Under the terms of the deal, the private equity firm Cinven will transfer ownership of Ufinet to a vehicle company called NewCo. Enel will own 21% of NewCo and Civen will own 79%. The two companies will share control of Ufinet, the Italian state-owned power company said in a statement.
Enel has the option to acquire all of Ufinet for another €1.32bn to €2.1bn between the end of 2020 and the end of 2021. If Enel does not buy Ufinet by December 31, 2021, it gives up the right of joint control.
Ufinet operates 49,000km of fiber optic lines in 14 countries from Mexico to Chile. The company recorded €159m in revenues in 2017.
Enel and the state-owned investment bank CDP started the fiber optic company OpEn Fiber in December 2016, looking to take broadband services to 250 cities in Italy by 2020.
Earlier this month, Enel outbid Spain’s Iberdrola to take control of Eletropaulo in Brazil. Enel’s offer valued Eletropaulo at BRL7.57bn ($1.96bn), or BRL45.22 per share, and included BRL1.5bn to fund Eletropaulo’s investment plans through 2022.
Also in June, Enel’s utility company in Chile tapped the bond market for $1bn, drawing one of the largest order books in months for a dollar deal in Latin America. Enel owns 62% of Enel Chile.
Enel Chile has also been active in the loan market. In February, it got an 18-month loan for $2bn loan to finance the acquisition of an additional 24.2% in Enel Generación Chile.