Colombia Preps Privatization of $5 Billion Electric Utility ISA

(Bloomberg) -- Colombia is preparing a sale of its controlling stake in the utility Interconexion Electrica SA, as President Ivan Duque’s administration moves ahead with plans to privatize some state assets.

The government started the process of selling some or all of its 51% stake in ISA, the fourth-biggest company on Colombia’s Colcap stock index, according to a document dated April 30 published on the Finance Ministry’s investor relations page. The entire stake would be worth about $2.7 billion, based on ISA’s current market value.

The ministry said it is studying the “optimal” number of shares to sell, and the appropriate mechanism under which it will take place.

“Once we’ve concluded the structuring phase, we’ll evaluate the best moment in the market to carry out the transaction,” the Finance Ministry said, in reply to written questions.

The Duque administration plans to raise around $3 billion this year by selling assets as it seeks to meet deficit targets without slashing public investment. The government could unwind its 8.5% stake in state-controlled oil producer Ecopetrol, or sell regional electric companies, according to the National Association of Financial Institutions, or ANIF, a Bogota-based think tank.

The $5.2 billion company operates 45,142 km of electricity transmission lines, 907 km of highways and 49,500 km of fiber optic lines with businesses in Colombia, Brazil, Chile, Peru, Bolivia Argentina and Central America.

ISA said in a statement that it had not been notified of the process and referred questions to the government.

Banks are working with potential bidders to form at least three consortia to bid on the ISA stake, according to two people familiar with the plan, who asked not to be named since they are not authorized to speak publicly on the matter.

The government would coordinate its sale with that of Empresas Publicas de Medellin, a utility company controlled by the city of Medellin, which this week began to sell its 10% ISA stake, the people said. EPM’s share sale was halted in March because the government was not ready to go forward, according to one of the people.

ANIF estimates that asset sales could raise as much as 30 trillion pesos (about $9 billion) by 2022.

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