Target Information

EPM, through its new subsidiary Afinia, will provide electric power services to 1.5 million customers (totaling 6 million users) across the departments of Bolívar, Cesar, Córdoba, Sucre, and 13 municipalities in the Magdalena department. Afinia represents the new brand of EPM Group in the Caribbean region, implementing a significant investment plan of $4 billion over the next five years to ensure reliable and high-quality electric service in its areas of influence. Over a decade, the total planned investment is projected to reach $8 billion.

Industry Overview in Colombia

The energy sector in Colombia is characterized by a mix of hydroelectric as well as thermal energy sources, crucial for meeting the growing energy demand of the country. Recent developments have seen a significant upsurge in investment and expansion of electric service coverage, particularly in underserved regions. The demand for reliable electricity has become increasingly vital, as the economy and population continue to grow.

In the Caribbean region, where Afinia operates, the need for service improvement is evident. The region traditionally suffers from challenges such as inadequate infrastructure and service reliability. Consequently, the deployment of investments like those from Afinia is expected to not only enhance service quality but also to stimulate local economic development.

Furthermore, the Colombian government has been actively encouraging foreign investment in the energy sector, promoting a competitive market that invites innovation and efficiency. This direction aligns well with EPM’s ambitions to lead the market and elevate service standards.

Given the strategic importance of the Caribbean region, EPM's investment is timely and conducive to addressing the pressing energy needs of the local population while fostering positive socio-economic changes.

Rationale Behind the Deal

The acquisition of CaribeMar by EPM, now rebranded as Afinia, brings forth a crucial opportunity to enhance and expand energy services in a region that has historically faced inadequacies. The commitment of $4 billion in initial investments demonstrates a firm resolve to elevate service quality and reliability. By focusing on infrastructure development and quality service delivery, Afinia aims to secure not only improved electrical distribution but also increased customer satisfaction.

This strategic move is vital for the overall operational efficiency of EPM as well, solidifying its position as the largest energy distribution and commercialization company in Colombia, with approximately 35% market share. This will allow EPM to leverage economies of scale, ensuring sustainable growth and competitive advantage.

Investor Information

Inverlink, a leading independent investment bank in Colombia with over 35 years of experience, acted as the exclusive financial advisor for EPM in this acquisition. Renowned for its expertise in mergers, acquisitions, structured finance, and corporate finance, Inverlink has successfully completed more than 200 transactions across over 10 countries in Latin America, amassing a value in excess of $25 billion. Its significant experience and reputation position it as a key player in facilitating transactions that contribute to national development.

Inverlink's President, Mauricio Saldarriaga, acknowledged the importance of this deal, indicating that their professional support played a crucial role in addressing the challenges related to the country's electricity service. The partnership with a robust entity like EPM offers great confidence in achieving reliable electrical services for the Caribbean region.

View of Dealert

This transaction signals a significant advancement for EPM and the energy sector in Colombia, as it effectively positions EPM to significantly uplift service provision in the Caribbean region. The increased investment not only promises immediate improvements in service quality but also long-term benefits for the local economy, potentially creating thousands of jobs and enhancing the quality of life for residents.

Moreover, given the track record of EPM in delivering high-quality services, this acquisition is likely to enhance competition and encourage further investment in the energy sector, which is crucial for meeting Colombia's growing energy demands. The full realization of the benefits from this deal, however, will depend heavily on the effective execution of planned investments and the establishment of robust operational strategies focused on customer satisfaction.

Overall, this deal reflects positive sentiment, indicating that it is likely to be a beneficial investment not only for EPM but also for the energy landscape of Colombia. Continuous improvement in service standards and investment in infrastructure is expected to yield substantial returns, reinforcing the positive trajectory of the sector.

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