Enel SpA (ENEL.MI), Europe's most highly indebted energy utility, is betting on Latin America to help raise its revenues, and far from planning asset sales in the region, it is looking to increase its presence there, said Chief Executive Fulvio Conti.
Italy-based Enel, reeling from the worst recession since World War II in its core markets of Italy and Spain, has announced plans to divest six billion euros ($7.7 billion) in assets and to cut costs in order to reduce its net debt, which ended 2012 at EUR42.95 billion.
In an interview, Mr. Conti declined to say what specific holdings Enel will sell, except that they aren't in Latin America. "We're not a seller [in Latin America], we're going the other way there," he said.
"Latin America offers three Ds: democracy, demography and development."
Large international power companies, such as Duke Energy Corp. (DUK) and German utility E.ON AG (EONGY, EOAN.XE), are also looking to deepen their Latin American presence to benefit from the region's overall expanding economy.
Chile, Colombia, Peru and Brazil are expected to grow between 4% and 6% this year, according to the United Nations Economic Commission for Latin America and the Caribbean.
Enel subsidiary Enersis SA (ENI, ENERSIS.SN), based in Santiago, Chile, plans to use part of the proceeds from last month's $6 billion capital increase for mergers and acquisitions in Latin America.
After a disputed shareholders' approval process due to the size and structure of the capital increase, Enersis raised about $2.4 billion in cash.
Enel contributed its Latin American assets to the increase, leaving Enersis as Enel's sole investment vehicle in the region for electricity generation and distribution, with the exception of renewable-energy assets which are part of Enel Green Power SpA (ELPSY, EGPW.MI).
Enersis, which also has operations in Argentina, Brazil, Colombia and Peru, has said it plans to earmark some of the cash for organic growth, and to buy out minority shareholders in the firms it controls.
"At this point, I cannot give details about timing or individual targets, but the earlier, the better," said Mr. Conti.
Chile's mining industry, which accounts for about 15% of gross domestic product, is among sectors that face growing electricity needs at a time when the Andean country may not meet its target of doubling installed-generation capacity to 30,000 megawatts in the next decade.
Several large power projects, including the 2,750-megawatt HidroAysen hydroelectricity project in which an Enersis subsidiary has a 51% stake, have been suspended or delayed by opposition from local communities and environmental groups.
HidroAysen remains on hold after its other shareholder, power generator Colbun SA (COLBUN.SN), asked the government for a clearer energy policy, including details on plans for the so-called electricity highway--a transmission backbone that would reduce blackouts and allow smaller producers to reach the country's grids.
"We will continue supporting HidroAysen as long as the government, both at the national and local level, supports it," Mr. Conti said. If that isn't the case, "we won't invest [in HidroAysen] and we'll do something else," he said.
foxbusiness.com
Italy-based Enel, reeling from the worst recession since World War II in its core markets of Italy and Spain, has announced plans to divest six billion euros ($7.7 billion) in assets and to cut costs in order to reduce its net debt, which ended 2012 at EUR42.95 billion.
In an interview, Mr. Conti declined to say what specific holdings Enel will sell, except that they aren't in Latin America. "We're not a seller [in Latin America], we're going the other way there," he said.
"Latin America offers three Ds: democracy, demography and development."
Large international power companies, such as Duke Energy Corp. (DUK) and German utility E.ON AG (EONGY, EOAN.XE), are also looking to deepen their Latin American presence to benefit from the region's overall expanding economy.
Chile, Colombia, Peru and Brazil are expected to grow between 4% and 6% this year, according to the United Nations Economic Commission for Latin America and the Caribbean.
Enel subsidiary Enersis SA (ENI, ENERSIS.SN), based in Santiago, Chile, plans to use part of the proceeds from last month's $6 billion capital increase for mergers and acquisitions in Latin America.
After a disputed shareholders' approval process due to the size and structure of the capital increase, Enersis raised about $2.4 billion in cash.
Enel contributed its Latin American assets to the increase, leaving Enersis as Enel's sole investment vehicle in the region for electricity generation and distribution, with the exception of renewable-energy assets which are part of Enel Green Power SpA (ELPSY, EGPW.MI).
Enersis, which also has operations in Argentina, Brazil, Colombia and Peru, has said it plans to earmark some of the cash for organic growth, and to buy out minority shareholders in the firms it controls.
"At this point, I cannot give details about timing or individual targets, but the earlier, the better," said Mr. Conti.
Chile's mining industry, which accounts for about 15% of gross domestic product, is among sectors that face growing electricity needs at a time when the Andean country may not meet its target of doubling installed-generation capacity to 30,000 megawatts in the next decade.
Several large power projects, including the 2,750-megawatt HidroAysen hydroelectricity project in which an Enersis subsidiary has a 51% stake, have been suspended or delayed by opposition from local communities and environmental groups.
HidroAysen remains on hold after its other shareholder, power generator Colbun SA (COLBUN.SN), asked the government for a clearer energy policy, including details on plans for the so-called electricity highway--a transmission backbone that would reduce blackouts and allow smaller producers to reach the country's grids.
"We will continue supporting HidroAysen as long as the government, both at the national and local level, supports it," Mr. Conti said. If that isn't the case, "we won't invest [in HidroAysen] and we'll do something else," he said.
foxbusiness.com
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