MGM Innova Group and Acqua Holdings mandated CIFI Latam S.A. (CIFI) as lead arranger of up to US$36 million in senior debt to finance three (3) small hydroelectric power plants (SHPs), Marca, Casca, and Alcaparrosa, all located in the Mantaro River basin in Junín, Peru.
The project combines MGM Sustainable Energy Fund II (MSEF II), a fund managed by MGM Innova Capital focused on green infrastructure investments that generate financial, social, and environmental results, and Acqua Holdings Inc, a private equity manager, focused on the development of small hydroelectric projects with low socio-environmental impact and the best international standards.
The project is currently in the construction stage. The total investment is estimated at sixty-eight million dollars (US$68,000,000). As part of the financial structuring, CIFI will provide up to twelve million six hundred and fifty thousand dollars (US$12,650,000) to finance the three HCPs: Casca, Alcaparrosa, and Marca. The financing will be executed in three senior debt tranches, one for each hydroelectric plant. CIFI will finance the first tranche and syndicate the other two with investment vehicles that CIFI manages or with third parties. The initial disbursement for the first stage is expected in the second quarter of 2023 and for the following tranches in the second half of the same year.
During this phase, the Project has negotiated usufruct and/or lease agreements with the communities near the SHPs and has provided other community support, explained Verónica Villacis, CIFI’s ESG officer. She also noted that it is estimated that, once installed, the three SHPs will avoid emitting 54,300 tons of CO2e per year, thanks to the generation of renewable hydroelectric energy. Moreover, according to Acqua Energía, these are the first and only renewable energy projects in Peru registered in the Gold Standard with certification in 4 Sustainable Development Goals.
Jorge Palomeque, Investment Officer of Structured and Corporate Finance at CIFI, expressed that it has been an enriching experience to structure this transaction with a client with extensive experience in the hydroelectric sector in Peru. Likewise, Vittorio Crovari, senior Structured and Corporate Finance analyst, stated that CIFI expects to accompany MGM Innova Capital in its following projects in the Latin American and Caribbean region.
About MGM Innova Group
It has more than 20 years of designing and implementing integrated environmental, financial, and technical solutions that contribute to the sustainable development of the energy sector and the mitigation or adaptation to climate change. Through MGM Innova Capital, it seeks to invest in green infrastructure with triple financial, social, and environmental results in Latin America and the Caribbean, promoting sustainability with rigorous environmental, social, and governance (ESG) guidelines.
About Acqua Energia
Acqua Energia (ACQUA) is an innovation initiative in the energy sector. Through a platform of 22 small hydropower plants, which are at different levels of development, ACQUA promotes the sustainable development of renewable energies with a strategy of promoting alliances allowing its partners to achieve a long-term 100% renewable supply, in unbeatable market conditions and contributing to the Sustainable Development Goals in a rapid and sustained manner.
CIFI is a non-bank financial institution with more than 20 years of experience in infrastructure and energy financing in Latin America and the Caribbean. Created in 2001, the company has analyzed more than 600 projects and has participated in more than 200 transactions for a value of more than US$1.8 billion. CIFI has become a leading participant in the trend toward sustainable infrastructure projects in Latin America and the region’s overall economic development.