World Bank member, IFC and the IFC Global Infrastructure Fund (GIF), managed by IFC Asset Management Company (AMC) are investing $100m in I Squared Capital-owned, Orazul Energy, to support low carbon and clean energy transitions in the Latin American region.
Orazul Energy’s growth will support a transition to lower carbon and cleaner energy sources in the region. Orazul Energy purchased the assets from Duke Energy International.
IFC and GIF have invested in assets in Argentina, Chile, Ecuador, and Peru with over 1.6GW of installed capacity from hydropower and thermal generation, 730 kilometers of transmission lines, and natural gas processing facilities.
Most of the energy output is from hydropower resources (81% percent), with the balance from thermal resources (19%). Orazul’s strong capabilities are expected to help incorporate more renewable power projects into the region to balance electric system loads and ensure continuous, reliable sources of electricity.
I Squared Capital partner Adil Rahmathulla said: “We are honored to have IFC and GIF join us in this partnership to help grow Orazul Energy.
“I Squared Capital sees strong growth potential for renewables in Latin America and the partnership will help provide cleaner and more reliable energy sources to the region.”
Access to energy is fundamental to economic development and energy use in Latin America is expected to grow by more than 80 percent through 2040, accompanying the region’s economic growth and rising middle class.
There is a growing need to reduce the dependence on carbon intensive generation and mitigate the impact of climate change, while ensuring reliable and affordable power to the population.
Orazul will contribute to this goal with its combination of renewable and flexible thermal (gas) portfolio and growth opportunities. These assets complement the inherent intermittency of wind and solar projects, thereby supporting their development.
The financing package consists of a $50m equity investment from IFC and a $50m equity investment from GIF, managed by AMC.
IFC’s Latin America and the Caribbean Infrastructure head Gabriel Goldschmidt said: “IFC has a long history of helping to transform the energy matrix in emerging markets.
“Latin America’s power sector is evolving quickly with the proliferation of new technologies, growing access to natural gas, and public sector reforms. With this investment, we are in a strong position to support a path toward a more sustainable, low carbon future.”
IFC Global Infrastructure Fund co-head Viktor Kats said: “We are pleased to have had the opportunity to partner with I Squared Capital and IFC to invest in Orazul.
“We see Orazul as the ideal base to develop a balanced power platform across Latin America, providing clean and economical power to fuel growth across the region.”
IFC is one of the world’s largest financiers in the power sector in emerging markets. It has committed nearly $14bn over the past seven years to support power generation. During that period, IFC invested two thirds of its energy portfolio in renewable assets that displace carbon-intensive energy generation.