Ontario Teachers’ invests in two Chile water utilities

The C$107.5bn Ontario Teachers’ Pension Plan bid C$541m in a competitive auction by Chilean government agency CORFO to increase its interests in water and wastewater utilities Essbio and Esval. The pension plan initially invested in the two utilities in 2007.

The Ontario Teachers’ Pension Plan (OTPP) has invested about C$541 million (€401 million; $564 million) to increase its stakes in two Chilean water utilities.

OTPP increased its holdings in the two utilities, Essbio and Esval, through a July 15 auction by Chilean government agency Corporación de Fomento de la Producción (CORFO). The acquisition increases OTPP’s stake in Essbio to 89.6 percent from 51.1 percent, and increases its interest in Esval from 69.8 percent to 94.2 percent, according to a statement.

Essbio and Esval operate infrastructure to treat and deliver drinking water, as well as to treat sewage and wastewater, according to a statement.

The sale of the two utilities values Esval at 11.7 times earnings before interest, taxes, depreciation, and amortisation (EBITDA), and values Essbio at 12.2 times EBITDA, according to CORFO.

CORFO will retain a 5 percent interest in each of the water utilities, allowing the agency to continue to veto utilities concessions, water rights transfers, and other proposals, according to a statement. A spokesperson for OTPP said public shareholders control the remaining interest in the two utilities.

OTPP first invested in Essbio and Esval in 2007. Stephen Dowd, senior vice president of OTPP’s infrastructure group, said in a statement that “Chile continues to be an excellent place to invest”.

OTPP has no other water investments in Chile, but does have an interest in SAESA, an electricity transmission and distribution company, according to a spokesperson. OTPP acquired SAESA jointly with Morgan Stanley Infrastructure in 2008 for $887 million.

OTPP manages assets of C$107.5 billion for 295,000 teachers and retirees, according to the pension plan’s website. OTPP infrastructure investments totaled C$7.1 billion as of December 31, 2010, according to the pension’s most recent annual report.