The Ontario Teachers’ Pension Plan has agreed to buy up to 100% of Esval, a public water and wastewater company in central Chile.
Esval, together with its subsidiary, Aguas del Valle(AdV), is Chile’s third-largest water operator, serving approximately 16% of the country’s regulated water market.
The purchase would be Teachers’ second investment in the Chilean water sector and in South American infrastructure. In May, Teachers’ agreed to buy two private water and wastewater companies: 100% of Aguas Nuevo Sur Maule(ANSM)and a controlling interest in Empresa de Servicios Sanitarios del Bio-Bio(ESSBIO). That deal is expected to close at the end of this month.
Jim Leech, senior vice-president of Teachers’ Private Capital, the pension plan’s private investment arm, says the investment is well suited to the pension plan’s objective of providing stable, long-term returns to help pay teachers’ pensions up to 70 years from now.
“We like these companies for a number of reasons,” he explains. “They are regional monopolies with exclusive rights to operate in their geographic area, they provide stable low-risk returns, and they have a very long economic shelf life consistent with our long-term investment goals.”
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In its latest offer, Teachers’ has agreed to acquire the 48.92% interest in Esval held by Consorcio Financiero and other shareholders for $384 million. Consorcio is Chile’s largest non-financial banking conglomerate and insurance company.
Teachers’ would also launch a public tender, as required under Chilean securities law, for 100% of Esval’s remaining shares. About 29% of these shares are owned by CORFO, a government agency, and most of the remaining interest is held by public shareholders.
Teachers’ offer is conditional upon the acquisition of at least 50.1% of Esval and the completion of due diligence.
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