No shocks here

For private capital providers, Actis’ acquisition of two electricity distribution businesses in Guatemala in a $345 million deal will provide further confirmation that the Central American nation is open for business.

Guatemala has been steadily building a reputation as a place where international capital is welcome. Thanks to things such as foreign and domestic capital being given equal treatment, and the ability to repatriate capital without restrictions, Guatemala has become Central America’s leading recipient of foreign direct investment (rising steadily from $263 million in 2003 to more than $700 million in 2010 and a projected $790 million in 2011, according to Banco de Guatemala).

For emerging markets investor Actis, the acquisition of DEORSA and DEOCSA from Spanish energy firm Gas Natural Fenosa also gives it access to 1.4 million customers typified by rising affluence. “People are using more electricity all the time – from getting connected to having washing machines and then air conditioning – so demand is rising rapidly,” says Torbjorn Caesar, co-head of Actis’ infrastructure business.          

The investment came from Actis’ second infrastructure fund, which closed on just over $750 million towards the end of 2009. Caesar says the fund is now two-thirds committed.