Duke Said to Narrow Bidders for $2 Billion Latin America Sale

  • Engie, Canada’s Brookfield chosen to submit binding bids
  • China Three Gorges also invited to make offer by end-August

Duke Energy Corp. has invited Canada’s Brookfield Asset Management Inc. and French utility Engie SA to submit binding bids for its Latin American power assets, people with knowledge of the matter said.

State-owned electricity generator China Three Gorges Corp. was also chosen to proceed to the next round, according to the people, who asked not to be identified because the information is private. Binding offers for the assets, which could fetch about $2 billion, are due by end of this month, the people said.

Duke Energy said in February it’s considering the sale of about 4,400 megawatts of generating capacity in Central and South America. Chief Executive Officer Lynn Good said by phone Thursday the company has started a more detailed due diligence process with a smaller group of potential buyers and aims to announce a deal by year-end.

Weak economic conditions in South America are driving Duke and its competitors to consider asset disposals. AES Corp. agreed to sell a utility in Brazil to CPFL Energia SA for $464 million in June.

Brazil Plants

Half the assets being sold by Duke are in Brazil, with the remainder in Argentina, Chile, Ecuador, El Salvador, Guatemala and Peru. Hydroelectric plants make up about two-thirds of the portfolio, according to the February statement. 

It would be simpler to sell the entire portfolio at once, though the company may divest it in pieces to achieve a higher value, Good said. All the sale proceeds will be used to reduce debt, Duke Energy Chief Financial Officer Steve Young said by phone Thursday.

Other bidders may also still be in the process, according to one of the people. Representatives for Brookfield, Duke Energy and Engie declined to comment. A spokesman for Three Gorges didn’t answer calls and an e-mail seeking comment.

Cutting Pollution

Chinese President Xi Jinping has sought to cut pollution and spur investment in non-fossil fuels in the world’s second-largest economy. China Three Gorges agreed to buy control of German wind farm operator WindMW GmbH from Blackstone Group LP in June, in a deal valuing the target at 1.7 billion euros ($1.9 billion) including debt, people familiar with the matter said at the time.

Brookfield has also been active in the energy market in South America. It agreed to buy a majority stake in Colombia power generation company Isagen SA for roughly $2 billion through one of its subsidiaries earlier this year.

Engie, formerly known as GDF Suez SA, is moving to boost its low-carbon businesses as part of the utility’s three-year plan. The Courbevoie, France-based company is selling about $4 billion of exploration assets spanning Europe to Africa, as it works to reduce exposure to fluctuating energy prices, people familiar with the matter said last month.

— With assistance by Cristiane Lucchesi, and Aibing Guo

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