CHILE Law and Practice Contributed by: Ignacio Errazquin, Adolfo Romero and Florencia Anguita, CMS Carey & Allende
1.3 Access to the Energy and Infrastructure M&A Market Access to Chile’s energy and infrastructure M&A mar- ket remains diverse and dynamic. • International strategic investors ‒ mainly from Europe, the USA, and Asia – continue to enter through joint ventures and acquisitions of ready- to-build (RTB) or commercial operation date (COD) portfolios, typically structured as share deals with reinforced warranty frameworks. • Infrastructure and private equity funds maintain interest but are adopting longer timelines and a stronger focus on asset management over green- field exposure. • Local developers, particularly mid-sized players, seek liquidity and partners with technical or finan- cial depth, creating opportunities for investors with strong structuring and financing capabilities. However, many medium-sized companies are reas- sessing their long-term presence in Chile, largely owing to environmental, social and communities’ complexities in project development and persistent curtailment issues affecting the profitability of opera- tional assets. These challenges are driving a natural market consolidation, favouring larger and financially stronger participants. 1.4 Energy and Infrastructure Projects Chile’s project pipeline continues to be dominated by renewable energy, particularly solar, wind, and stor- age, with typical generation projects ranging from 100–300 MW and BESS systems between 50–200 MW/200–800 MWh. Hybrid PV + BESS projects have gained strong momentum, both as a response to curtailment and to optimise price arbitrage. In parallel, green hydrogen (H2V) initiatives are progressing gradually, with early- stage pilot projects in Magallanes and Antofagasta – although most have yet to secure bankable offtake agreements. In infrastructure, the focus lies on reinforcing the national transmission system and improving flexibil- ity, including the planned North–Central high-voltage direct current (HVDC) interconnection and the expan-
sion of 220 kV and 500 kV lines. Conventional gen- eration (gas and diesel) remains limited to back-up capacity and plays only a minor role in new investment decisions. 2. Establishing and Exiting Early- Stage Companies in the Energy and Infrastructure Industry 2.1 Establishing and Financing a New Company The establishment and financing of an early-stage company in the energy and infrastructure industry is normally preceded by project development activities carried out by a sponsor, where the procurement of licences, permits and land use rights for the develop- ment of the project is key to forming the basis for the creation of a new company and – more impor- tantly – for the financing of the new venture by third- party lenders. These project assets are contributed to a limited liability SPV incorporated in Chile, so as to allocate key assets within the company’s perimeter to facilitate third-party financing and to contain business risk within a single entity. This type of venture is the standard and is normally implemented by experienced sponsors in the industry that form new SPVs. Although less common, found- ers of innovation solutions to be implemented in the energy market (such as net-billing solutions and low- scale solar panels) also form early-stage companies and seek strategic partners for business growth or undergo venture capital rounds for financing. 2.2 Liquidity Events The most common liquidity event is the sale of the companies to larger local incumbents or to foreign companies looking to enter the Chilean market. Valu- ation drivers and the appetite of investors vary based on the development stage of the project (eg, green- field, RTB or operational). Generally, transactions are all-cash and might include additional price adjustment rules contingent to certain conditions precedent, such as attainment of RTB status within a given timeframe, or the confirmation of performance parameters for operational projects.
63 CHAMBERS.COM
Powered by FlippingBook