Colombian state-controlled power grid operator Interconexion Electrica SA, or ISA, next week plans to raise about 371 billion Colombian pesos (US$186 million) from the sale of new shares, the company’s top official said Thursday.
The company will use the proceeds to finance its continuing $1.8 billion investment program, Luis Fernando Alarcon, ISA’s chief executive, said Thursday in an interview in Medellin.
The company will sell 32 million new shares, which at current prices would total about COP371 billion, he said.
The actual sale price of the shares may be lower than the market price, he said. “But that’s the theory,” he added.
The company will sell the shares through a book-building process open to the public.
Monica Agudelo, a Medellin-based market analyst with local brokerage Asesores en Valores SA, said ISA’s share are very attractive. She recommends them.
“The company is a great investment on the medium term,” she said. “The price doesn’t rise that fast, but it’s increase is pretty steady.”
The company has agreed with power generators and with distribution companies on take-or-pay contracts. ISA charges the same amount regardless of the electricity it transports. So revenues are fixed ahead of time and vary little over time.
As the cost of operating a transmission network is rather low compared with the investment it requires, the main expenses for the company are the cost of capital.
The Colombian government, which controls ISA, won’t participate in the capital increase so that its stake will be diluted to 51.4% of the company from a current 52.9%. Additionally, state-oil company Ecopetrol SA owns 5.5% of ISA.
ISA is currently investing in new grids and in improving existing grids in Colombia, Peru and Brazil and will very likely bid for a 800-kilometer grid in Guatemala on Friday, Alarcon said.
The company is also negotiating a contract with the Colombian government to build and operate several highways linking the country’s second-largest city, Medellin, with other areas. That project would be worth between $2.5 billion and $3 billion over 15 years, he added.
Shares of ISA Thursday fell 0.2% to COP11,600, while the IGBC benchmark index Thursday fell 1.2%.
Shares of ISA trade over the counter in New York.