Client Background & Objective
One of IMAP's largest public M&A deals in 2015 was closed by South Andes Capital (IMAP Chile) who advised Empresas Públicas de Medellín (EPM) in their acquisition of Aguas de Antofagasta S.A. (ADASA), a cross-border transaction valued at US$965m. Serficor Partners (IMAP Mexico) assisted South Andes Capital when presenting this acquisition opportunity to EPM.
South Andes Capital (IMAP Chile) has been a key M&A advisor in the utilities sector in Latin America for over 20 years, having advised on many important water utility transactions. South Andes Capital advised FCAB (Ferrocarril de Antofagasta a Bolivia), a provider of freight train services in the mining sector belonging to the Chilean conglomerate Luksic Group, on their bid for water company Aguas Nuevas in 2010. South Andes Capital maintained a strong relationship with FCAB and parent Luksic group in the following years.
Amid changes in strategy, the Luksic Group wanted to reduce exposure and focus its investments on companies in the mining sector. Under guidance from the Luksic Group, FCAB was looking to sell its control of ADASA, a water and waste company, in 2014. The Luksic group wanted the sale of ADASA to be carried out as quickly as possible.
IMAP Advantage & Approach
FCAB invited South Andes Capital to pitch on the proposed sale of ADASA. When FCAB selected another organization to help sell ADASA, South Andes Capital transitioned smoothly and effectively to the buy-side by pulling together its experts and leveraging its market knowledge to look for the best potential buyer. Empresas Públicas de Medellín (EPM), an important Colombian utility company that was targeting expansion in the region, was identified. South Andes Capital knew that Serficor Partners (IMAP Mexico) had a good working relationship with top level corporate executives at EPM so despite South Andes Capital's existing relationship with some executives of EPM's electricity business sector, it reached out to Serficor to assist with an introduction to the targeted executive.
Serficor made a quick introduction and South Andes Capital was able to start a dialogue where it had the opportunity to demonstrate its M&A experience in the water utilities sector as well as its knowledge of the Chilean market and companies such as ADASA. A buy mandate was signed with EPM within two weeks of the introduction.
Now representing EPM for the prospective purchase of ADASA, South Andes Capital leveraged the work that had been done previously. South Andes Capital had a deep understanding of the market landscape and acquired relationships with important advisors through successful work in earlier years. A breadth of legal, regulatory, tax and technical advisors had already been lined up by South Andes Capital during its initial discussions with EPM which was then formally assembled into a team to serve EPM in its acquisition effort.
South Andes Capital proceeded to guide EPM through the process and help the organization show that they were the best candidate to buy ADASA. EPM had the financial capabilities to carry out the purchase and was ready to move with a top team in place. EPM fully fit the criteria that FCAB and parent company Luksic Group had stipulated from the start. EPM did not require financing to complete the deal, was already aggressively trying to enter the Chilean market and capable of closing a transaction quickly.
Outcome & Impact
Only seven months after the initial contact, the Luksic Group agreed to EPM's purchase of ADASA. ADASA became EPM's largest international investment and marks a significant step forward towards strengthening their position in the utilities sector in Latin America. As the owner of one of the largest desalinization plants in Latin America and with a presence in several high growth mining regions in Chile, ADASA is an excellent addition to EPM's operations.
Gabriel San Martin