China Southern Power Abandons Pursuit of Chile Deal

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(Bloomberg) — Lea en español

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China Southern Power Grid Co. has abandoned efforts to gain control of Chile’s top power transmission company, partly to avoid push-back from Washington, according to people familiar with the matter.

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Negotiations have ended between China Southern Power, which already holds almost 28% of Transelec SA, and Canadian pension funds that own the remainder, said the people, who asked not to be identified because the information is private. There were also disagreements over valuation and structure, they said.

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The potential transaction had been under discussion for about two years and could have been valued at more than $4 billion, Bloomberg reported in December.

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But the broader political and diplomatic environment weighed on the talks, the people said. The Trump administration has stepped up efforts to encourage governments across Latin America to scrutinize Chinese investments more closely in sectors deemed critical to national security and supply chains.

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While Chile’s economic prosecutor’s office has approved multibillion dollar acquisitions from Chinese companies, there has been growing attention and public debate over foreign control of critical infrastructure and the balance between investment openness and national interest. The administration of Chile’s new right-wing President José Antonio Kast is evaluating a mechanism for screening foreign investment.

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To be sure, if conditions change, China Southern Power may look to resume efforts to gain control of Transelec, for which it had teamed up with Latin America-focused asset manager Patria Investments Ltd., one of the people said.

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Canada Pension Plan Investment Board, British Columbia Investment Management Corp. and Public Sector Pension Investment Board hold roughly 72% of Transelec.

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Transelec and Patria declined to comment, as did representatives for the Canadian pension funds. Guangzhou-based China Southern Power didn’t immediately respond to requests for comment.

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Transelec operates high-voltage lines linking generation hubs with distributors to help integrate Chile’s growing renewable power capacity into the grid. It has more than 10,000 kilometers (6,200 miles) of power lines across the country.

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—With assistance from Carolina Gonzalez and Kathy Chen.

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