TORONTO, Aug. 10 /CNW/ - The Ontario Teachers' Pension Plan (Teachers')
has agreed to acquire up to 100 per cent of Esval S.A., a public water and
wastewater company in Central Chile.
Esval, together with its subsidiary, Aguas del Valle S.A. (AdV), is
Chile's third largest water operator, serving approximately 16 per cent of the
country's regulated water market.
The purchase would be Teachers' second investment in the Chilean water
sector and in South American infrastructure. In May, Teachers' agreed to buy
two private water and wastewater companies - 100 per cent of Aguas Nuevo Sur
Maule, S.A. (ANSM) and a controlling interest in Empresa de Servicios
Sanitarios del Bio-Bio S.A. (ESSBIO). That deal is expected to close at the
end of this month.
In its latest offer, Teachers' has agreed to acquire the 48.92 per cent
interest in Esval held by Consorcio Financiero and other shareholders for
C$384 million (US$365 million). Consorcio is Chile's largest non-financial
banking conglomerate and insurance company. Teachers' would also launch a
public tender, as required under Chilean securities law, for 100 per cent of
Esval's remaining shares. About 29 per cent of these shares are owned by
CORFO, a government agency, and most of the remaining interest is held by
Teachers' offer is conditional upon the acquisition of at least 50.1 per
cent of Esval and the completion of due diligence.
Jim Leech, Senior Vice-President of Teachers' Private Capital, the
pension plan's private investment arm, said the investment is well suited to
the pension plan's objective of providing stable, long-term returns to help
pay teachers' pensions up to 70 years from now.
"We like these companies for a number of reasons. They are regional
monopolies with exclusive rights to operate in their geographic area, they
provide stable low-risk returns, and they have a very long economic shelf life
consistent with our long-term investment goals," said Mr. Leech.
"With infrastructure investments, we aim for returns that are highly
correlated to inflation. This helps us cover the cost of inflation-protected
pensions for our plan members."
Mr. Leech said Chile is an ideal country in which to invest because of
its growing economy, openness to foreign investment, stable political
environment and mature regulatory climate.
As an owner and investor, Teachers' will continue to rely on local
management to operate these services as a separate entity, with water rates
regulated by the government.
"We look forward to working with CORFO and with the solid local
management, which will continue to operate the services, in a long-term
partnership. Our role is as a long-term financial backer and strategic
advisor," said Mr. Leech.
About the Ontario Teachers' Pension Plan
With $106 billion in net assets, the Ontario Teachers' Pension Plan is
the largest single-profession pension plan in Canada. An independent
organization, it invests the pension fund's assets and administers the
pensions of 271,000 active and retired teachers in Ontario.
Teachers' Private Capital is the plan's private investment arm and one of
North America's largest private investors.
Its infrastructure group focuses on the acquisition and long-term
retention of low-risk assets that generate stable returns linked to inflation.
The combined value of the fund's investments in infrastructure, timber and
private equity is approximately $16 billion (US$15 billion).
For further information:
For further information: Debra Hanna, Ontario Teachers' Pension Plan,
(416) 730-5351 (office), (416) 995-5841 (cell), email@example.com