Target Information

Actis has successfully acquired approximately 87% of Enel Generación Perú S.A.A., the Peruvian subsidiary of the Italian energy giant Enel SpA, along with a 100% stake in Compania Energetica Veracruz S.A.C. The total value of this acquisition is estimated at US$1.3 billion, with an enterprise value of around US$2.1 billion. Enel Generación Perú boasts a diversified energy generation portfolio of 2.2 GW, featuring 12 operational assets with an additional asset currently under construction.

Enel Generación Perú's portfolio includes a significant presence in renewables, comprising wind and solar assets, alongside hydro and thermal capacity. This strategic acquisition enables Actis to operate independently within the vibrant Peruvian energy market, where it aims to enhance its renewable energy initiatives and capitalize on growth potential.

Industry Overview

Peru's energy sector is recognized for its robustness, characterized by high market fundamentals and a liberalized market structure that fosters competition and innovation. Between 2010 and 2022, the energy demand in Peru registered a commendable compound annual growth rate (CAGR) of 4.7%. This growth is driven by increasing investment in infrastructure, a rising population, and an expanding economy that generates higher energy needs.

The country has made significant strides in diversifying its energy matrix, focusing on renewable resources to enhance sustainability and reduce reliance on fossil fuels. Currently, Peru is witnessing an expansion in its renewable energy sector, with significant investments flowing towards solar, wind, and hydropower projects aiming to meet the nation's ambitious decarbonization targets.

Moreover, the government's supportive policies and incentives promote private sector involvement in the energy industry, creating a conducive environment for foreign investors. This, combined with Peru's geographical advantages for solar and wind generation, positions the country as an attractive investment landscape in Latin America.

As the energy landscape continues to evolve, opportunities for new projects are emerging, especially in renewable energy development. This change presents an enticing prospect for companies focused on sustainable energy solutions, as consumer preference increasingly shifts towards affordable and environmentally friendly power sources.

Rationale Behind the Deal

The acquisition aligns with Actis’ strategy of expanding its sustainable infrastructure investments in growth markets, particularly in energy generation. By acquiring Enel Generación Perú, Actis enhances its footprint in the region, tapping into a diversified and resilient portfolio that includes a significant renewable energy component.

Actis aims to leverage its experience and expertise to scale the platform and increase the share of renewables in its energy mix. The push for reliable, affordable, and clean energy solutions puts the acquired assets in a prime position to meet energy demands in Peru, potentially leading to substantial financial returns.

Investor Information

Actis is a leading global investor specializing in sustainable infrastructure, with a strong focus on energy investments in Latin America. With a history of backing 14 companies in the region's power sector, Actis has established itself as the largest owner and operator of wind and solar power generation in Latin America.

The investment in Enel Generación Perú represents the tenth platform investment from Actis’ flagship Energy 5 Fund, which holds US$6 billion in investable capital. Through this acquisition, Actis continues its strategy of backing high-quality management teams to develop successful power generation ventures in attractive markets.

View of Dealert

The acquisition of Enel Generación Perú by Actis is perceived as a strategic and potentially lucrative investment. Given the significant growth prospects within Peru's energy sector, particularly in renewables, this deal effectively positions Actis to capitalize on advancing energy transition initiatives in the country.

Furthermore, with Actis’ established track record in the region and expertise in managing energy assets, the company is well-equipped to optimize the performance of its newly acquired portfolio. The combination of mature hydro, thermal, and an expanding renewables footprint will appeal to an increasing customer base seeking clean energy solutions.

Overall, this investment reflects Actis' commitment to sustainable energy development, and their capacity to navigate and grow within a dynamic and evolving market landscape. As renewable energy becomes central to global energy policies, Actis stands to gain significantly from this well-structured acquisition.

View Original Article