Ontario Teachers', Morgan Stanley invest $887m in Chilean infrastructure

The Canadian pension and the infrastructure platform of investment bank Morgan Stanley have each acquired 50 percent of Chile’s second largest electric energy company.

The Ontario Teachers’ Pension Plan and Morgan Stanley Infrastructure have purchased Chilean electric company SAESA Group from New Jersey-based Public Service Enterprise Group for $887 million (€604 million).

Teachers’ and MSI will each own 50 percent of the company, which has an enterprise value of $1.3 billion, and have assumed $400 million in existing company debt.

SAESA is the second largest electricity distributer in Chile in terms of geographic coverage and serves 16 percent of the country’s 2.6 million people. The company also own 135 megawatts of wind, hydro and thermal power generation capacity as well as 950 kilometers (590 miles) of transmission lines.

MSI closed its most recent infrastructure fund on $4 billion in May. Morgan Stanley invested 10 percent of the fund in the transaction. The infrastructure platform targets global, long-term investments associated with providing essential goods and services.

Teachers’ has C$108.5 billion ($107.1 billion; €73 billion) in assets and launched its infrastructure portfolio in 2001. The pension focuses on long-term investments with low-risk, inflation-linked returns.

Infrastructure is a key element of Teachers’ investment allocation strategy, a spokeswoman told PEO in March, as they provide a hedge against inflation.

Teachers’ is not new to Chilean infrastructure. In 2007, the Canadian pension purchased three Chilean water companies.

In June, the Teachers’ purchased two water supply and sanitation companies from Southern Cross Group. The pension bought 100 percent of Aguas Nuevo Sur Maule and took a 50.1 percent stake in Empresa de Servicios Sanitarios del Bio-Bio before launching a tender offer for its remaining shares.

Two months later, the pension agreed to acquire Chile’s third largest water operator, Esval, from banking and insurance company Consorcio Financiero.