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Antofagasta Deal Elevates EPM Water Expansion

18 May 2015
Research Note

On 23 April 2015, Colombian utility group Grupo EPM (Empresas Públicas de Medellín) agreed to purchase Chilean water utility Aguas de Antofagasta (ADASA) for US$965 million from Antofagasta Plc—pending closure by the end of May. EPM is a municipal-owned enterprise of Medellín, Colombia and owns electricity, drinking water, sanitation and gas network positions in five other Latin America countries.

ADASA holds a 30-year concession, expiring in 2033, for water supply and sanitation services in seven municipalities within Antofagasta, the country’s mining heartland. ADASA supplies 18.5% of its total annual water production to the mining sector, representing 35% of its revenue. Antofagasta Plc is primarily a copper mining firm, and the deal raises cash for the company at a time when commodity prices have fallen 10% while transferring municipal water assets to a more experienced water utility player.

EPM plans to invest US$1.5 billion in water, or 28% of its total investment plan, between 2014 and 2017. The firm entered the Chilean market in 2013 through the acquisition of Los Cururos wind farm. Since then it has sought to build its country presence in water. EPM has operated as a wastewater BOT firm in Mexico since 2013 through the acquisition of Tecnología Intercontinental SA (Ticsa).

Takeaways

  • ADASA desalination assets, coordination with mining industry improve EPM water profile
  • Ticsa anchors EPM Mexico expansion through industrial wastewater
  • EPM pursues further regional expansion via power investments

Companies Mentioned

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