Canadian diversified global corporation ATCO announced today that through its subsidiary Canadian Utilities Limited, has entered into an agreement with Conduit Capital Partners LLC to acquire Electricidad del Golfo (EGO), which owns a 35 megawatt (MW) hydroelectric power station in the state of Veracruz, Mexico.
Conduit Capital Partners LLC is a private equity investment firm focused on the independent electric power and energy industry in Latin America and the Caribbean.
In commercial operation since 2014, power output from the hydroelectric facility is under long-term contract. ATCO will also assume EGO’s existing management team, whose local expertise the company plans to use along the way in the region.
Electricidad del Golfo is one of the largest hydroelectric power plants operating under the self-supply regime in Mexico and is fully contracted with high quality offtakers. The plant includes a small reservoir for the regulation and optimization of the Apatlahuaya River flows. Conduit began building the state-of-the-art plant in 2011, and it has been continually operating at high output and safety standards since 2014.
The aggregate purchase price of the proposed transaction is approximately US$ 90 million (including the assumption of approximately US$ 26 million of net financial debt). The proposed transaction is subject to customary conditions and is anticipated to close in the first quarter of 2018.
The acquisition seeks to cement ATCO’s position in the recently reformed Mexican energy market, as the company further develops a flexible and diverse portfolio of electricity assets to meet the evolving needs of its customers.
“The energy sector is changing, and we are playing a key role in enabling that transition for our customers around the world,” said in a statement Wayne Stensby, Managing Director, Electricity with ATCO. “Our existing presence in Mexico affords us invaluable knowledge of the local operating environment, regulatory framework and community relationships, all of which are crucial as we continue to grow our footprint in this diverse and vibrant market.”
The acquisition marks the latest milestone in ATCO’s growth in Mexico, where the company continues to expand its integrated offering of energy and infrastructure solutions. Most recently, in February 2017, ATCO announced that it had partnered with RANMAN Energy to develop an innovative and highly scalable distributed power generation solution in the rapidly developing World Trade Centre Industrial Park in San Luis Potosi.
George Osorio, Conduit’s Managing Partner, stated, “This was a highly successful development project and exit for our investors. Attracting a strategic energy group like ATCO underscores the effectiveness of Conduit’s strategy as well as the firm’s expertise in identifying, building and bringing projects to realization.”
Conduit is also planning to begin the sale process for its 22 MW wind power plant in Monterrey, Mexico in 2018, Osorio added. BNP Paribas acted as exclusive financial advisor to Conduit on the sale.