China Southern Power Grid Co. is in advanced negotiations to acquire a majority participation in the Chilean company of Transselec SA energy transmission, people said familiarly said in one of the largest Chinese businesses abroad this year.
China’s second largest power operator, which already has almost 28% of Transelec, is considering joining the alternative asset manager focused on Latin America, Patria Investments Ltd., and a Chinese sovereign background to make an offer by the appearances detained by three Canadian pension funds, the sources said not to be identified due to the confidentiality of negotiations.
The possible agreement, discussed about two years ago, can be valued at more than $ 4 billion, the sources said. Companies may reach an agreement in the coming weeks, they added, noting that the conversations continue and no final decision has been made.
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The parties will still need to obtain approval from Chilean regulators for the business, which may be challenging, as China already controls much of the South American country’s energy distribution market, the sources said.
Although the Chilean Economic Attorney’s office has approved billionaire acquisitions of Chinese companies, there has been an increase in inspection and public debate on foreign control of critical infrastructure and the balance between opening for investments and national interest.
Transselec is Chile’s largest power transmission company, operating high voltage lines and connecting generation centers to distributors to help integrate the growing renewable capacity into the network. It has over 10,000 kilometers (6,200 miles) of power lines around the country.
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Pension funds that hold the remaining 72% of transselec are Canada Pension Plan Investment Board, British Columbia Investment Management Corp. and the Public Sector Pension Investment Board.
Bloomberg News reported in December 2023 that China Southern Power was considering making an offer for the participation. The CPPIB is the second largest shareholder of Transelec, with 27.73%, while BCI and PSP have 26%and 18.48%, respectively, according to the latest annual report from Transelec.
Representatives of Transselec and Canadian pension funds refused to comment, while China Southern Power, based in Guangzhou, and the Patria did not respond to requests for comment.
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China Southern Power bought its current participation in Brookfield Transelec for about $ 1.3 billion in 2018. The Chinese company has expanded its presence in Latin America, including an acquisition of about $ 3 billion from Enel Spa Peruvian actives.
In addition to the China Southern Power, State Grid Corp. From China has a significant presence in Chile, having acquired companies such as Chilquinta Energia SA and Company General of Electricidad SA (CGE) in the beginning of this decade.
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