Shares in Enersis fell 13 per cent on Thursday as the South American power utility owned by Spain’s Endesa announced a $8bn rights issue.
Endesa, which owns 61 per cent of Enersis, will fulfil its part of the rights issue by transferring as much as $4.9bn in assets to Enersis. Minority investors will be asked to contribute as much as $3.1bn in cash.
At $8bn, the rights issue, to be put to a shareholder vote on September 13, is worth about two-thirds of Enersis’ market capitalisation.
Italy’s Enel owns 92 per cent of Endesa and has been seeking to expand its business in Latin America as the eurozone financial crisis drags down economic growth in Italy and Spain.
The move to consolidate assets into Enersis is in line with Enel’s previously stated goal of growing in Latin America through the creation of a single company holding most of its assets in the region.
JPMorgan, in a research note, said the deal was positive for Enel because it streamlined the Latin American operations, created savings in operational expenses and taxes, gives an “attractive” evaluation to the Endesa assets and lowers Enel’s debt.
Shares in Enel rose €0.12 to close at €2.18.
The cash Enersis raises in the rights issue would be used for expansion, according to a person familiar with the issue. That money would be in addition to the €5.4bn Endesa has already pledged to spend through 2016 on capital projects in Latin America.