Top cross-border M&A deal of the year: China Southern Power Grid

Southern Power Grid International (CSGI) in June of last year. This marked one of the largest cross-border deals in Latin America in 2024 and the biggest M&A transaction in Peru since 2020.

The acquisition by CSGI included Enel’s distribution company, now known as Pluz Energía, and the management unit, Enel X, as part of Enel’s divestment strategy in Peru. Enel’s power generation assets were sold separately to Actis, an investment firm.

This deal was recognized as the Cross-Border M&A Deal of the Year due to its scale, complexity, and significance. It showcased the strong interest of international investors in the power and utilities sectors in Peru. The power distribution network acquired by CSGI is the largest in Peru, covering over 1,600 square kilometers and servicing more than half of Lima’s population of 10.3 million.

The transaction, which involved various jurisdictions such as Chile, the UK, and the US, in addition to China and Peru, commenced in April 2023 and concluded in June 2024 after undergoing regulatory reviews in both Peru and China.

Bruno Amiel, a partner at Miranda & Amado, the law firm advising CSGI, described the deal as a significant milestone, with a Chinese investor entering a key market through a complex transaction that evolved over time.

Fitch Ratings affirmed CSGI’s A+ rating in December 2024, stating that the acquisition would enhance CSGI’s business profile by adding regulated earnings from assets under Peru’s robust regulatory framework.

Chinese state-owned firms have been actively investing in Peru in recent years, with notable acquisitions in the energy sector. These include China Three Gorges’ purchase of the Chaglla hydroelectric plant and China Yangtze Power’s acquisition of Luz del Sur. The latter deal, valued at $3.59 billion, was slightly larger than CSGI’s transaction with Enel.

In addition to the energy sector, Chinese companies are expanding their presence in Peru’s mining and infrastructure industries. For instance, Cosco Shipping recently inaugurated the Port of Chancay, South America’s first greenfield port in years.

The transaction was supported by financial advisors including JP Morgan and Morgan Stanley, and legal counsel from firms like A&O Shearman and King & Wood Mallesons. The Export-Import Bank of China provided financing for CSGI’s acquisition, while Hogan Lovells and Rebaza, Alcázar & De Las Casas represented Enel.

Overall, this deal highlighted the growing interest of Chinese investors in Peru’s key sectors and demonstrated the attractiveness of the country’s regulatory environment for international acquisitions.