California-based Sempra Energy is all set to begin the sale of its Peruvian and Chilean businesses, including the 83.6% stake in Luz del Sur in Peru and 100% stake in Chilquinta Energía in Chile.
The formal process of selling businesses of Sempra Energy, which was announced last month, will now take place from next month. The sales will also include the company’s stake in two energy-services companies, Tecnored and Tecsur, which provide electric construction and infrastructure services to Chilquinta Energía and Luz del Sur, respectively. The deal is expected to be completed by the end of this year.
In 1999, Sempra Energy acquired about 50% stake in Chilquinta Energía and about 42% stake in Luz del Sur. In 2011, the company acquired the stakes of its partners, which resulted in 100% ownership of Chilquinta Energía and majority ownership of Luz del Sur. The remaining shares of Luz del Sur are held by institutional investors and the general public.
Luz del Sur serves more than 4.9 million consumers in the southern region of Lima, Peru and is considered to be one of the largest electric companies in the country. The company is also in the developing and operating hydroelectric projects, including its Santa Teresa hydroelectric plant in central Peru.
Chilquinta Energía is considered to be the third-largest distributor of electricity in Chile. The utility serves more than 2 million consumers in the cities of Valparaiso and Viña del Mar in central Chile and also is involved in developing and operating electric transmission lines.
Sempra Energy executive vice president and chief financial officer Trevor I. Mihalik said: “Our businesses in Peru and Chile are considered some of the most admired and desirable companies in the region. We expect this to be a highly competitive process with strong interest from both strategic and financial investors.”
Bank of America Merrill Lynch (BAML) and Lazard will serve as financial advisors to Sempra Energy in the transaction, while White & Case will act as legal advisor.
Earlier this month, the company entered into an agreement to sell Sempra Renewables and its 724MW operating and development assets to American Electric Power (AEP) for $1.05bn.