Canadian renewable energy and utility conglomerate Algonquin Power & Utilities (APUC) has purchased a 53.51% stake in Chilean water utility Empresa de Servicios Sanitarios de Los Lagos (ESSAL) from Aguas Andinas for $92.3 million.
Due to Chilean regulations, a tender offer process will also be launched for the total remaining shares of ESSAL.
ESSAL is a leading water and wastewater utility company which has approximately 230,000 connections in southern Chile, where it operates 48 potable water production systems, 29 sewage plants, and 4,100km of distribution and sewage networks covering 33 municipalities across three regions.
"The acquisition of ESSAL supports APUC's strategic growth program and broadens our regulated footprint into a historically stable and foreign investment-friendly OECD country with a robust regulatory framework," Arun Banskota, CEO of APUC, said.
"As APUC's first international water utility, ESSAL will benefit from our core competency of responsible utility ownership, as well as leverage our best practices of safety, operational excellence, and innovation. We are excited with this opportunity to serve the water needs of our Chilean customers," Banskota added.
APUC intends to maintain local and experienced management and operational teams that are anticipated to run ESSAL following the closing of the transaction, and the Canadian company expects to continue to invest in the water system to improve operations, sharing best practices with its other utilities, the company said.
"With this transaction, we strengthen our ability to make investments that climate change requires, which will also result in job creation and economic activity when the country needs it most," said Marta Colet, Aguas Andinas’ CEO, said."The Algonquin entry to the Chilean water utility market is a sign of how sound and attractive this sector is for international investors, an industry with important growth opportunities in which Aguas Andinas continues to be a major player."
The financing plan for the transaction is expected to be consistent with APUC's current credit profile and strong investment grade credit ratings. Closing of the Transaction is expected to occur in 2020.
Chilean law firm Carey acted as local counsel to ACUP, with a team led by partners Alberto Cardemil, Cristián Eyzaguirre and Francisco Guzmán, and who were assisted by associates Andrés Latorre, Benjamín Sáa, Camila Lavín and Manuel José Barros.
Chilean law firm Prieto advised Aguas Andinas, and whose team was led by partners Fernando Bravo, José Andrés Pascual and Nicolás Yuraszeck, with associate Agustín Martorell.