Enel Sells Peru Assets to China’s CSGI for $2.9 Billion

(Bloomberg) -- Enel SpA reached an agreement with China Southern Power Grid Co. to sell a set of Latin American assets, as Italy’s largest utility makes moves to cut its debt.

Rome-based Enel sold distribution operations in Peru for about $2.9 billion, the company said in a statement Friday, confirming an earlier report by Bloomberg. The enterprise value for the assets is about $4 billion, the company said.

The transaction is in line with Enel’s most recent strategic plan which calls for reshaping the company’s geographical presence and slashing debt, which ballooned to around €60 billion ($65 billion) at the end of last year. 

The company’s strategy also includes disposing of assets worth €21 billion, mainly in Latin America and Europe, while focusing on six major markets, including Italy, the US and Brazil. 

Impact on Debt

The asset sale announced Friday is expected to generate a reduction in consolidated net debt of about €3.1 billion in 2023 with a positive impact on net income of approximately €500 million, the statement said. 

The company’s planned exit from Peru is not completed yet, however, as Enel still has a generation business in the country — with more than 2GW of installed capacity, nearly half from renewables — that remains up for sale.

The Peru generation and distribution operations have more than 1.5 million customers, according to Enel’s website. They distributed 8,441 gigawatt hours in 2021, according to a press release. 

The deal could further boost the Latin America presence of China Southern Power, known as CSGI, after it bought a 28% stake in Chilean utility Transelec. Latin America has become a key region for Chinese companies seeking alternative markets amid heightened scrutiny in Europe and the US. 

(Updates with strategy from third, paragraph, adds Chinese presence in Latin America.)

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