GasValpo is the second largest gas distribution company in Chile, servicing more than 80,000 customers in three business segments (residential, commercial and industrial) and led by a robust and successful management team.
It runs a wholly-owned 1,500km network based in Region V and sources natural gas from both the recently commissioned LNG terminal in Quintero Bay and exports from Argentina. In FY2010, it has sold more than 164,000,000m3 of gas (average growth of 50% pa) and achieved FY2010 (normalised) EBITDA growth of 50% on FY2009.
GasValpo’s headquarters are located in Viña del Mar, and also services cities such as Valparaiso, Concón, Quilpué and Villa Alemana. An industrial client, Codelco’s El Teniente copper smelter, is also serviced in Region VI.
In November 2008, GasValpo purchased Energas, its only natural gas competitor in Region V. This was an opportunistic acquisition at a highly attractive price significantly below regulated asset base that brought substantial synergies while increasing GasValpo’s volumes and customers.
Through cleverly structured and long term gas supply agreements, GasValpo started marketing LNG to the large industrial segment.
Since its acquisition in April 2008, GasValpo has shown a solid performance, underpinned by:
- Smart set of gas supply arrangements (including a long term and reliable LNG gas supply agreement);
- The settlement of transportation agreements (which resulted in being the only gas distribution company in Chile able to access Argentinean gas); and
- Continuing availability of Argentinean gas being sold into the spot market. GasValpo provides a unique growth platform to take advantage of the recent availability of LNG following the commissioning of the LNG terminal in Quintero Bay.
Key investment highlights
Governance and regulatory regime
GasValpo operates in a friendly regulatory regime providing the company with marketing opportunities supported by environmental concerns and potential changes to environmental laws in the medium and long term (as LNG is considered to be more environmental-friendly than other alternative fuels).
GasValpo provides a unique growth platform to take advantage of the recent availability of LNG following the commissioning of the LNG terminal in Quintero Bay that underpins natural gas supply to Chile’s Central Region.
Experienced management team
GasValpo’s robust management team has successfully led the company through difficult times. Despite the Argentinean energy crises that curtailed gas imports in early 2004 and the February 2010 earthquake, management was still able to deliver a solid performance while continuing to enlarge GasValpo through organic growth and successful M&A.