IFC, a member of the World Bank Group, and the IFC Global Infrastructure Fund (GIF), a fund managed by the IFC Asset Management Company (AMC), invested a combined $100 million in Orazul Energy Partners LLC, an affiliate of Orazul Energy Holdings LLC, an energy platform in Latin America owned by I Squared Capital. Orazul Energy’s growth will support a transition to lower carbon and cleaner energy sources in the region. Orazul Energy purchased the assets from Duke Energy International.
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IFC and GIF have invested in assets in Argentina, Chile, Ecuador, and Peru with over 1,600 megawatts of installed capacity from hydropower and thermal generation, 730 kilometers of transmission lines, and natural gas processing facilities. Most of the energy output is from hydropower resources (81 percent), with the balance from thermal resources (19 percent). Orazul’s strong capabilities are expected to help incorporate more renewable power projects into the region to balance electric system loads and ensure continuous, reliable sources of electricity.
“We are honored to have IFC and GIF join us in this partnership to help grow Orazul Energy,” said Adil Rahmathulla, Partner at I Squared Capital. “I Squared Capital sees strong growth potential for renewables in Latin America and the partnership will help provide cleaner and more reliable energy sources to the region.”
Access to energy is fundamental to economic development and energy use in Latin America is expected to grow by more than 80 percent through 2040, accompanying the region’s economic growth and rising middle class. There is a growing need to reduce the dependence on carbon intensive generation and mitigate the impact of climate change, while ensuring reliable and affordable power to the population. Orazul will contribute to this goal with its combination of renewable and flexible thermal (gas) portfolio and growth opportunities. These assets complement the inherent intermittency of wind and solar projects, thereby supporting their development.
The financing package consists of a $50 million equity investment from IFC and a $50 million equity investment from GIF, managed by AMC.
“IFC has a long history of helping to transform the energy matrix in emerging markets,” said Gabriel Goldschmidt, IFC’s Head for Infrastructure in Latin America and the Caribbean. “Latin America’s power sector is evolving quickly with the proliferation of new technologies, growing access to natural gas, and public sector reforms. With this investment, we are in a strong position to support a path toward a more sustainable, low carbon future.”
“We are pleased to have had the opportunity to partner with I Squared Capital and IFC to invest in Orazul,” said Viktor Kats, Co-Head of the IFC Global Infrastructure Fund. “We see Orazul as the ideal base to develop a balanced power platform across Latin America, providing clean and economical power to fuel growth across the region.”
IFC is one of the world’s largest financiers in the power sector in emerging markets. It has committed nearly $14 billion over the past seven years to support power generation. During that period, IFC invested two thirds of its energy portfolio in renewable assets that displace carbon-intensive energy generation.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About IFC Asset Management Company (AMC)
IFC Asset Management Company LLC (AMC), a wholly-owned subsidiary of IFC, invests third-party capital, enabling investors to benefit from IFC’s expertise in achieving strong equity returns, as well as positive development impact in the countries in which it invests. AMC has raised a total of $9.8 billion of capital across 13 investment funds. For more information, visit www.ifcamc.org.
About I Squared Capital
I Squared Capital is an independent global infrastructure investment manager focusing on energy, utilities, and transport in the Americas, Europe, and select high growth economies. The Firm has offices in New York, Houston, London, New Delhi, Hong Kong and Singapore.
About Orazul Energy
An energy business with thermal, hydroelectric, transmission lines and natural gas facilities, Orazul Energy is headquartered in Houston, Texas and has operations throughout Latin America.