CPP Investments Teams Up with I Squared Capital in Strategic Inkia Energy Investment
The landscape of investment in renewable energy is continuously evolving, and a recent partnership between the Canada Pension Plan Investment Board (CPP Investments) and I Squared Capital exemplifies this trend. In a significant move, CPP Investments has announced an intention to invest alongside I Squared Capital in Inkia Energy, a prominent power generation company operating in Peru. The terms of the agreement indicate that CPP Investments will acquire a 50% stake in Inkia, with the entire transaction valuing the company at an impressive US$3.4 billion.
A Deep Dive into Inkia Energy
Inkia Energy stands out in the Peruvian electricity sector, boasting a reliable generation portfolio of 2.6 gigawatts (GW) through its subsidiaries, Kallpa Generación S.A. and Orazul Energy Perú S.A. The company plays an essential role in addressing the rising electricity demand in Peru, primarily driven by the country’s robust mining industry. This underscores the importance of Inkia not just as a business entity but also as a key player in the national energy infrastructure.
Expanding Horizons: The Project Pipeline
Both CPP Investments and I Squared Capital recognize the potential for extensive growth within Inkia’s project pipeline, which exceeds 4 GW. This ambitious pipeline includes various renewable energy sources such as wind power, solar photovoltaic systems, natural gas-fired generation, and innovative battery storage solutions. By focusing on these diverse energy options, the partnership aims to enhance Inkia’s standing in the ever-evolving Peruvian power market while ensuring grid reliability and facilitating a broader energy transition.
A Vision for Sustainable Investing
Bill Rogers, Managing Director and Head of Sustainable Energies at CPP Investments, expressed enthusiasm about the partnership, highlighting that Inkia operates a robust power generation platform perfectly aligned with CPP’s long-term investment strategy. According to Rogers, the deal reflects CPP’s continued commitment to investing in reliable, long-duration power generation assets that adhere to strong governance and sustainability principles. This partnership not only echoes a shared vision but also marks a significant step toward sustainable energy solutions in the region.
I Squared Capital’s Role
I Squared Capital has been a long-standing partner in Inkia’s evolution since 2017, helping reshape it into a scalable and diverse power generation platform. The company’s journey has been marked by the divestment of all non-core assets across ten Latin American jurisdictions and a significant expansion of its core Peruvian generation capacity, growing from 1.6 GW to its current level of 2.6 GW. As I Squared continues to play an integral role in Inkia’s governance and strategic direction, its experience and operational expertise bolster the company’s future growth.
The Development-Driven Focus
Emphasizing the development-led nature of Inkia, Gautam Bhandari, Global Chief Investment Officer and Managing Partner at I Squared Capital, echoed sentiments about the growth potential within the partnership. Bhandari remarked that Inkia represents a crucial infrastructure platform poised for long-term growth. He also revealed their shared conviction regarding the enduring fundamentals of the Peruvian power market, reinforcing Inkia’s capability to address the country’s evolving energy demands.
CPP Investments’ Latin American Endeavors
CPP Investments has been significantly active in Latin America since 2006, employing a disciplined approach across various asset classes in the region. This partnership extends CPP’s reach and influence in the energy sector, tapping into the knowledge and track record of I Squared Capital, known for its extensive operational expertise in energy, utilities, and transport sectors.
Regulatory Path Ahead
While the partnership marks a bullish step for both CPP Investments and I Squared Capital, the transaction still requires customary closing conditions and regulatory approvals. This final step is essential to ensuring that both organizations can proceed with their initiatives in the dynamic Peruvian energy landscape.
Looking Forward
The collaboration between CPP Investments and I Squared Capital in Inkia Energy not only reflects a significant financial commitment but also a shared vision for a sustainable, energy-efficient future in Peru. The evolution of this partnership will undoubtedly be watched closely as it unfolds, potentially setting benchmarks for similar ventures in the renewable energy space.