CDC leads US$135M acquisition of Entergy
3 March 2002
In its biggest ever investment, CDC Capital Partners has led the acquisition of Entergy Corp.'s stakes in three investor-owned power businesses in Latin America.
CDC is investing US$70m, out of a total of US$135.5m, with Scudder Latin American Power Fund II acting as co-investor.
While other investors remain shy, CDC has reiterated its strategic commitment to the power sector in emerging markets, through the acquisition of attractively priced equity stakes in private power companies. This comes at a time when most North American and European power companies are divesting.
The deal comprises Entergy Corp.'s stakes in Edegel S.A. in Peru, together with the San Isidro IPP in Chile and the Costanera/CBA generation company in Argentina. Edegel is the largest portion of the deal and is the country's largest privately owned generation company. The businesses currently supply power totalling some 3,685 MW, through a combination of hydro-electric and thermal power plants.
This is CDC's first investment in the Peruvian power sector and reflects the improving political and economic situation, since the elections last June. Following the first round of privatizations in the mid 1990s, the market is now deregulated and operates on the framework pioneered in Chile and the UK in the 1980s. Power prices in the Peruvian market have fallen consistently since deregulation and prices are expected to continue falling, as operations are improved and new capacity enters the market. Edegel has led the field by enhancing its operational efficiencies and adding new capacity.
CDC is in the process of restructuring its US$300m+ power portfolio, invested across Latin America, Africa and Asia, into one international power company, currently called CDC Globeleq.
Commenting on this announcement, Bob Hart, the recently appointed Chief Executive Officer of CDC Globeleq, said:
"As well as being a significant investment in its own right, this is an excellent fit for our Latin America portfolio. Current market conditions mean we are able to acquire good quality power assets, like these, at attractive prices. We expect that CDC Globeleq's investment in these power businesses will encourage other private equity investors into the market, providing much needed fiscal support for the underlying economies."
