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Brazil’s BTG Pactual, P2 Sells Energy Company to SunEdison

21 May 2015

(Reuters) Brazil’s BTG Pactual and its partners P2Brasil and GMR Energia jointly sold 100% of renewable energy company Latin America Power (LAP) to SunEdison.

The deal comes almost three years after BTG and P2Brasil, an infrastructure investment fund set up by Patria Investimentos and Promon, jointly bought 87.6 percent of LAP for $450 million. GMR bought the remaining shares at that time.

The companies declined to disclose the amount SunEdison paid for LAP, which operates small hydro power plants in Chile and Peru.

According to BTG and P2Brasil executives, the initial plan was to sell LAP between 2017 and 2018, but interest from international investors for projects that yield good dividends led them to put the plan forward.

“The final price was significantly above our expectations,” Renato Mazzola, BTG’s head of infrastructure, told Reuters.

LAP currently has an installed capacity of 30 megawatts (MW), which should grow to 330 MW by the end of 2016.

The Santiago-based company expects to install 660 MW more in the next five years.

SunEdison will buy LAP using its subsidiary TerraForm Global, which was created to manage energy generation assets outside the United States and Canada.

TerraForm filed a request earlier this month with the U.S. market regulator to conduct an initial public offering.

One factor that favored the deal was that LAP contracts are referenced in dollars, which protects revenues from currency fluctuations.

TerraForm said in the prospectus of its future IPO that it expects to generate $164.8 million in available cash for distribution at the end of 2016.

The company should distribute most of the money in the form of dividends.

LAP sees revenues of around $45 million in 2016 and has signed contracts to increase that amount to $150 million in 2017.

The deal comes at a moment when countries such as Peru, Chile, Colombia and Mexico are gaining more attention from investors seeking assets in Latin America, in a move detrimental to Brazil.

According to Andre Sales, a P2 associate, a better business climate in these countries helped attract foreign investment to LAP.

“There is an environment of larger transparency,” he said.