Union Group pushes into Peruvian hydro

London-based private investment firm Union Group increased its exposure to Peruvian hydropower last week through acquiring Empresa de Generacion Electrica Canchayllo (EGEC), a subsidiary of UK- and Wales-based Rurelec created in 2011, for $14.3 million. 

The transaction will see Union Group become owner of a $10 million, 5.26-megawatt (MW) run-of-river hydro plant on the Pachacayo River in the Junin department, about four kilometres away from the town of Canchayllo. The plant was designed to produce about 38 gigawatt-hours (GWh) of clean energy per year. It was connected to the Peruvian power grid in December 2014.  

The Canchayllo plant is the company's first run-of-river hydropower development in Peru. Financial close on the project was reached last June, at a time when Rurelec owned 70 percent of EGEC. 

In a statement, Union Group president and founder Juan Sartori argued that hydropower is a “strategically important sector for Union Group in Peru, on involving long-term, cash-generative real assets that help diversify our global institutional investors' portfolios.” 

“This acquisition,” he added, “is part of our approach to buy existing assets, as well as developing and building our plants ourselves.”

Union Group has its sights on markets which it says exhibit high growth potential but have traditionally experienced underinvestment, such as Uruguay, Paraguay, Peru and Colombia. The firm focuses on projects in the infrastructure, logistics, agriculture, mining, oil and gas, and power generation sectors. 

The company is currently building two hydropower plants with a combined capacity of 27MW in the district of Monzon, Huamalies, in the Huanuco region.