Partners Group investment fuels EnfraGen’s LatAm expansion

Swiss private equity firm Partners Group has agreed to acquire a 50 percent equity stake in EnfraGen, a subsidiary of US-based energy infrastructure developer Glenfarne, which builds and owns renewable energy assets and conventional power plants in Latin America.

While neither firm disclosed financial details, Partners Group said in a statement that part of its capital injection would go towards funding the acquisition of Termoflores, a 610MW natural gas plant that is the second-largest back-up power generator in Colombia.

As renewable energy plays an increasingly bigger role in meeting electricity demand on the continent, intermittency creates demand for conventional back-up sources like natural gas-fired or diesel plants, Brendan Duval, chief executive of EnfraGen and a founding partner of Glenfarne, told Infrastructure Investor.

“The opportunity for us here is to invest in renewables as well as power plants that support intermittency,” Duval explained.

The acquisition brings EnfraGen’s portfolio of power assets to 1.4GW. The company provides back-up power for grid stability and renewable power generation in investment-grade Latin American countries, through its two businesses – Prime Energía and Fontus. Prime Energía focuses on the former with a portfolio comprising eight thermal back-up power generation assets in Chile and the newly-acquired Termoflores asset in Colombia. Fontus, which focuses on baseload renewable power generation, has three hydropower plants in Panama and “an expanding portfolio of solar assets”, Partners Group said in a statement without providing further detail.

However, it said that key areas of focus following the investment will include the ongoing development of the Fontus assets in Chile, Colombia and Panama; developing the existing greenfield portfolio and further expanding the EnfraGen platform through strategic acquisitions.

Partners Group declined to disclose which of its funds made the investment, but told Infrastructure Investor the committed equity came from a number of its infrastructure vehicles.

According to Ed Diffendal, Partners Group’s managing director for private infrastructure in the Americas, EnfraGen represented a “compelling, risk-adjusted proposition” for investing capital in Latin America. “The regulated capacity regimes in Colombia and Chile provide stable cash flows that are appropriate for our infrastructure mandate,” Diffendal told Infrastructure Investor.

Latin American appeal

The region’s renewables sector has been attracting infrastructure investors from around the world, especially in the past year. Last November, Canadian pension manager CDPQ partnered with Colombia’s infrastructure development agency, Financiera de Desarrollo Nacional, and some of the country’s pension funds, to invest up to $1 billion in the country’s infrastructure, including renewable energy.

This past May, Copenhagen Infrastructure Partners launched a new fund – the firm’s first emerging markets-focused vehicle, which will invest in greenfield renewable energy projects, primarily “in the fast-growing economies” of Latin America and Asia.

The following month, another European fund manager, DIF Capital Partners, announced the opening of an office in Santiago, to begin investing in projects in the region, starting with Chile and Uruguay. According to DIF partner Allard Ruijs, the Dutch firm will mainly target what he described as the “backbone” of the firm’s strategy which includes public-private partnerships, concessions and renewable energy projects.

Last week, French fund manager Ardian also announced a clean energy deal in Latin America, acquiring a 49 percent stake in two solar plants in Tacna and Panamericana, in southern Peru from Spain’s Solarpack. The plants have a combined capacity of 48.6MW after repowering, bringing Ardian’s total installed renewable energy capacity to nearly 3GW across wind, solar, hydro and biomass in Europe and the Americas. It opened an office in Santiago in June 2018.