Enel Chile seeks to buy EGP assets

CHILE: Enel Chile, the country's largest power company, is planning a major move into renewables through the acquisition of the assets from sister company Enel Green Power (EGP).

Enel Green Power has installed roughly 475MW of wind in Chile
Enel Green Power has installed roughly 475MW of wind in Chile

Enel Chile operates 6.3GW of mostly hydroelectric and thermoelectric capacity through its 60%-owned subsidiary Enel Generacion.

But its Italian parent company Enel said it has no plans to continue investing in conventional generation in Chile, instead concentrating on renewables through EGP, which has an installed capacity of more than 1GW of capacity in the country, including 475MW of wind.

This situation has led to accusations of conflict of interests from minority shareholders in the Chilean businesses.

In response, Enel Chile's board of directors has proposed merging the two businesses to consolidate its position as the biggest player in the country's energy market.

Simplifying the group's capital structure would also increase returns to shareholders.

"This merger would allow us to achieve greater synergies, more organic growth, diversify the portfolio of projects and improve management of the generation assets which EGP Latam owns through its subsidiary EGP Chile," Enel Chile chairman Herman Chadwick said in a letter to the group's CEO Francesco Starace last month.

There is uncertainty whether the deal will go through as it is dependent both on a successful share offering to increase Enel Chile's stake in Enel Generacion to over 75%, and reaching agreement with Enel on the price to be paid for the Chilean assets.

But removing the conflict of interests and consolidating ownership could make the EGP's pipeline of projects more attractive and quicken development.

"This should transmit more profits to shareholders and accelerate the development of projects as this will now become a corporate strategy," Marcelo Catalan, head of equity research at Santiago stockbrokers BCI Corredora de Bolsa, told Windpower Monthly.


Elsewhere in South America, Enel Green Power Peru has started construction work on the 132MW Wayra I project in southern Peru.

The project will comprise 42 3.15MW turbines and is due online in the first half of next year.

It will be Enel's first wind farm in the country.

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