I Squared Capital agreed to purchase a 3,400-MW portfolio of Latin American and Caribbean power assets from a subsidiary of Kenon Holdings Ltd. for roughly $1.18 billion, marking I Squared's second large power acquisition in South America.
The New York-based infrastructure fund, which is targeting a fund raise of reportedly more than $5 billion for its latest investment vehicle, ISQ Global Infrastructure Fund II LP, by 2018, announced Nov. 26 an agreement to buy the portfolio of generating assets from Inkia Energy Ltd., a direct subsidiary of IC Power Ltd., which is owned by Kenon.
Under terms of the deal, I Squared will pay $1.177 billion in cash and assume "excess proportionally consolidated group cash at closing above $49.9 million," according to a Nov. 26 release.
The portfolio spans Bolivia, Chile, the Dominican Republic, El Salvador, Guatemala, Jamaica, Nicaragua, Panama and Peru, representing the bulk of capacity owned by IC Power via its Peru-based Inkia subsidiary, including an electric distribution utility serving about 1.7 million customers in the region, I Squared said in a Nov. 27 release.
"This transaction reinforces I Squared Capital's commitment to infrastructure in Latin America. The Inkia portfolio comes with a highly seasoned and successful development team as well as a robust pipeline of renewable and natural-gas generation projects," I Squared partner Adil Rahmathulla said in a statement.
The deal adds to the fund's previous $1.2 billion acquisition of Duke Energy Corp.'s Latin American power business, outside of Brazil, in October 2016. That portfolio contained about 2,300 MW of hydro and natural gas generating assets, transmission and natural gas processing facilities spread across Peru, Chile, Ecuador, Guatemala, El Salvador and Argentina.
Upon closure of the deal, which is expected in the coming months, I Squared would own approximately 5,700 MW of generating capacity in Latin America from its two acquisitions, the fund confirmed in an email.
For Kenon, which earlier this year opted to withdraw its efforts to bring IC Power public in an initial public offering, the sale is a culmination of its efforts to exit its Latin American power holdings and highlights the demand for large international power portfolios among financial buyers.
Kenon earlier this year indicated it was fielding third-party interest for its Latin American platform, with bidders emerging with nonbinding offers for its IC Power holdings in July. Kenon indicated on Oct. 26 that it was in advanced negotiations with financial investors seeking to purchase its Latin American and Caribbean assets.
Bank of America Merrill Lynch served as a financial adviser to Kenon, with Credit Suisse and Norton Rose Fulbright LLP advising I Squared.
