Medellin’s Public Utility EPM Purchases Aguas Antofagasta of Chile

The utility Grupo EPM (Empresas Públicas de Medellín), owned by the municipal government of Colombia’s second largest city, has reached an agreement to purchase the water utility Aguas de Antofagasta, S.A. (ADASA)  in Chile, subject to Chile’s Empresa Concesionaria de Servicios Sanitarios S.A.  (ECONSSA), the  agency charged with guaranteeing community access to potable water and sanitation services. This is EPM’s second investment in Chile, following the investment in the Parque Eólico Los Cururos wind farm.

The deal, worth $965 million US dollars, is EPM’s largest foreign investment to date. “We are very happy with the arrival of ADASA to our group, because we can add very relevant experience to keep advancing our presence in the water and sanitation sector, and the in the treatment of sea water and bulk water provisioning for  large mining and industrial clients; areas in which we see tremendous opportunities for EPM in the future, not just in Chile, but in other Latin American countries where we have a presence,” said EPM’s general manager Juan Esteban Calle Restrepo. “We reiterate our thanks to the Chilean community for opening the doors of their territory and allowing us to participate in their dreams of growth and development, with social inclusion.”

Above photo (credit EPM): EPM’s General Manager Juan Esteban Calle Restrepo at the press conference announcing EPM’s acquisition of ADASA

ADASA holds the concession for water and sewer services for Antofagasta, Calama, Tocopilla, Taltal, Mejillones, Sierra Gorda, and Baquedano, all in Chile’s northern region, until December of 2033. The company has 162,851 paying customers, representing a population of 546,000; 64% in Antofagasta. The utility currently processes 2.11 cubic meters per second of water, 30% of that being seawater, desalinized through plants in Taltal and Antofagasta. The Antofagasta desalinization plant is the largest in Latin America, producing 600 liters per second of potable water.

“We are very happy with this agreement, especially because ADASA will be operated by a very prestigious company with experience in delivering public services to millions of clients in various countries. This will permit us to concentrate our forces and investments in our mining projects, especially in the Antofagasta region, said Diego Hernandez, CEO of Antofagasta plc., the parent company of Aguas de Antofagasta.

This second Chilean investment adds to EPM’s international holdings in El Salvador, Guatemala, Mexico and Panama, in addition to its domestic Colombian holdings.

According to ratings firm Fitch, EPM’s current acquisitions of Aguas de Antofagastia along with 22% of Brasil’s Taesa electrical transmission company for $500 million USD, should not have a negative effect on EPM’s credit quality. 70% of the Taesa acquisition and 40% of the ADASA acquisition will be financed with debt, according to the ratings agency, which also noted EPM’s $5.5 billion USD Hidroituango hydroelectric project, expected to provide 2,400 MW of additional capacity when it comes online in 2018. Fitch expects EPM to continue along an aggressive growth strategy while maintaining a conservative balance sheet, as it works to reach its target of $16 billion USD in revenues and $5.5 billion in EBITDA by 2022.