DOW JONES LBO WIRE
Conduit Capital Sees Three Exits In One Week
12/18/2007 – It's harvest time at emerging markets energy investor Conduit Capital Partners as the firm sees three realizations in less than a week.
Conduit Capital has sold Jamaica Energy Partners, a power facility in Old Harbor, Jamaica, to Basic Energy Ltd., a private Latin American energy company, for $92.5 million; and completed the sale of Mamonal, also called Proelectrica, to a consortium of local Colombian companies, for $17.5 million. The firm has also agreed to sell its 13.2% stake in Peru-based Aguaytia.
All three companies have been long-standing investments for Conduit, which first became involved with the companies in the early and mid ‘90s. The firm invested in Jamaica Energy Partners in 1993 and increased its ownership in the company from a minority stake to owning nearly a 100%, tapping three successive funds. The latest sale has generated a 4.4 times cash-on-cash return for its first, 3.4 times return on the second, and about 1.8 times on the third fund, said Scott Swensen, chairman of Conduit. Jamaica Energy comprises two barge-mounted diesel-fired generating plants with installed capacity totaling 125 megawatts.
Mamonal, in which the firm first invested in 1995, generated a 17% internal rate of return and 3.4 times cash for the firm.
Conduit also said it has agreed to sell its stake in Aguaytia, one of its investments in Peru. Conduit had lined up a prospective buyer for its stake in Aguaytia, but the other partners in the project, Duke Energy Corp. and Maple Energy PLC, exercised their right of first refusal, "so they will be the purchasers," Conduit said.
Aguaytia is an integrated natural gas fired project managed by Duke Energy. Conduit said it expects to close the transaction within 60 days.
The debt market jitters have not impacted the Latin American market, making it a good time to sell as deal prices remain high, said Swensen. On the flip side, the firm is compelled to go after greenfield investments for new deals rather than acquisitions.
"We have been outbid so many times," said Swensen.
As a result of the sales, Conduit will wrap up the final liquidation from its $100 million Latin Power I fund, which it raised in 1993. The Latin Power II fund, which closed in 1998 with $157 million of committed capital, has one remaining investment, a stake in Peruvian power firm Edegel SA.
The two funds invested in a total of 18 projects and both have returned more than two times the invested capital, according to Conduit.
Conduit is currently investing its $393 million Latin Power III fund, which closed in September 2006.
Conduit's three funds specialize in independent electric power and energy projects in Latin America and the Caribbean, and have made investments in Mexico, Chile, Peru, Brazil, Argentina, Colombia, Jamaica, Honduras and Guatemala. Conduit launched in 2003, managing funds formerly known as the Scudder Latin American Power Funds which were developed by Scudder Stevens & Clark more than 12 years ago, according to Conduit's Web site.
BNP Paribas acted as exclusive financial adviser to Conduit on the sales.
-Matthew Cowley contributed to this story.
Reach Conduit Capital at 212-485-8900