Isagen Falls on Day Before Colombia Auction With One Bidder Left

  • Chilean power co. Colbun withdrew on tight schedule, price
  • Colombia to hold auction of its majority stake on Wednesday

Isagen SA, a Colombian state-controlled power generator, fell in the final day of trading before the government auctions off its stake after a potential bidder pulled out.

The shares dropped 5 percent to 3,250 pesos at 2:30 p.m. in Bogota trading, after earlier losing as much as 6.4 percent.

Chile’s Colbun SA, one of two approved bidders for the government’s Jan. 13 auction, said in a filing released Monday that it was dropping out. That leaves Toronto-based Brookfield Asset Management Inc. as the sole potential bidder in a process that started in 2013 and was delayed by lawsuits that argued to keep Isagen in state hands or alleged problems in the sale process.

“The market is really skeptical, it’s a process that has already been suspended, faced lawsuits, and has set a high price,” Jaime Pedroza, an analyst at Credicorp Capital’s Colombia unit, said in a telephone interview. “The volatility is reflecting the uncertainty about the process going through.”

Brookfield, Canada’s largest alternative asset manager, has $220 billion worth of assets under management and is in the midst of raising an additional $23 billion to help fuel future acquisitions, in addition to the $2 billion spinoff of its private equity arm in the coming months.

The Isagen transaction, which would be made through its publicly-traded subsidiary Brookfield Renewable Energy Partners, would be substantially smaller than other acquisitions it has made, including a proposed takeover of Australian port and rail company, Asciano Ltd.

Colombia is seeking at least 4,130 pesos per share in the auction, the equivalent of about $2 billion in total. The government plans to use the money to fund a highway building program.

Colbun told Chile’s securities regulator in a filing released Monday that it wouldn’t present a bid because of tight deadlines and after the government boosted the price for Isagen.

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