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Friday, Sep 29, 2023

Sempra to Sell South American Utilities, Sharpen Focus

Sempra Energy plans to leave South America.

The San Diego-based corporation announced on Jan. 28 that it plans to sell its businesses in Peru and Chile by the end of 2019.

Sempra (NYSE: SRE) said the upcoming sales of Luz del Sur in Peru and Chilquinta Energía in Chile will support the company’s strategic focus.

“We have set a clear strategic goal of becoming North America’s premier energy infrastructure company,” said Jeff Martin, chairman and CEO of Sempra Energy, in a statement distributed by the company. “This planned sale allows us more focused capital investment in the U.S. and Mexico to support additional growth opportunities, with a view toward creating greater shareholder value and a stronger balance sheet.”

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Martin added that over the last two decades, the South American utilities have performed strongly for Sempra.

In June, activist investors made the case that Sempra needed to narrow its business focus. Sempra signed a cooperation deal with Elliott Management, Bluescape Energy Partners and Cove Key Management in September. The following month, it seated two new board members chosen in consultation with the activist shareholders.

Sempra holds a 100 percent stake in Chilquinta Energía and 83.6 percent stake in Luz del Sur. It also has interests in two energy-services companies, Tecnored and Tecsur, which provide electric construction and infrastructure services to Chilquinta Energía and Luz del Sur.

Sempra’s footprint in South America grew gradually.

In 1999, the corporation acquired roughly half ownership in Chilquinta Energía and an approximate 42 percent ownership interest in Luz del Sur. In 2011, Sempra acquired its partner’s stakes in the utilities, resulting in 100 percent ownership of Chilquinta Energía and majority ownership of Luz del Sur. Institutional investors and the general public also hold shares of Luz del Sur.

Send energy industry news to Brad Graves at bradg@sdbj.com or call him at (858) 277-6359, extension 3102.


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