Conduit Capital Partners, a private equity firm that invests in Latin American infrastructure assets, has acquired a 50 percent ownership stake in Brazilian hydroelectric project developer GLEP Energias Renováveis e Participações.
Terms of the transaction were not disclosed, but a source familiar with the deal said that Conduit’s capital commitment is in excess of $50 million.
GLEP has two hydroelectric power plants under construction and an additional 22 that are in various stages of development. Together, the 24 plants represent 411 megawatts of electric generation capacity, which will be contracted out to a consortium of power distributors under long-term power purchase agreements.
The company had originally planned to auction off a 30 percent equity stake, which would require it to raise capital again within six months. Conduit structured the deal so that GLEP will get more equity capital spread out over a longer period of time, preventing the need to raise more money in the near term.
The 18-month financing arrangement will mark Conduit Capital’s biggest single capital commitment yet in Latin America, Conduit co-founder George Osorio told II. Osorio also said that the deal is subject to certain conditions over time that could decrease or increase the amount of capital being committed.
The firm’s former most recent equity investment in the region was a $68 million commitment Conduit made toward a $1.4 billion pipeline concession in Peru awarded earlier this month.
Conduit is investing out of its $393 million Latin Power III fund, which is now 50 percent invested.
The investment will be the firm’s seventh in hydroelectricity developers, Osorio said. Conduit has previously invested in hydroelectric projects in Mexico and Chile.
Osorio said Conduit was attracted to the investment due to the attractive investments available in Brazil from the government and development agencies for small hydro developments.
“The Brazilian Development Bank gives very attractive terms and interest rates to build more of these because the country really needs them,” Osorio said.
He also said that “what drove us on making this investment and keeping with it was the strength of the local partners”, Brazilian construction company Gomes Lourenço. Lourenço “fit the bill” of a potential partner for Conduit since the company had previously worked on hydroelectric projects and had been recommended by local banks.
Brothers Carlos and Guilherme Lourenço will stay on as the chief executive officer and chief operating officer, respectively, of GLEP. Conduit appointed Marcelo Vandelli, who had previously represented Conduit in another Brazilian investment from its Latin Power II fund, as GLEP’s new chief financial officer.