Latin America Loan: Project Aconcagua’s US$860m financing
Water world The US$860m non-recourse financing package that supported Project Aconcagua underscores the importance of sustainable financing and infrastructure in a region severely impacted by prolonged droughts.
Project Aconcagua is groundbreaking as the first multi-client, multi-purpose desalinisation project, supplying sustainable water to industrials and communities of central Chile. The tailor-made structure addressed the specifics of each of the Desal Plant and Aqueduct projects, and the objective of sponsor Patria Investimentos – one of Latin America’s largest investment funds – to keep both as independent as possible.
The financing was divided between two initiatives. It included a US$385m term loan and US$21m debt service reserve letter of credit to fund a 1,000 litres per second desalination plant in Quintero Bay and a 28km aqueduct to San Isidro. It also included a US$435m term loan and US$21m debt service reserve letter of credit for a 79km aqueduct and a 6km tunnel connecting San Isidro to Anglo American Sur’s Los Bronces copper mine.
Structured as a seven-year mini-perm complete with step-ups that took pricing from about 250bp over SOFR to just 300bp, the financing leveraged long-term contracted cashflows, supported by VAT facilities.
The financing was led by BNP Paribas, DNB Bank, Natixis and SMBC as joint lead arrangers, joint bookrunners and green coordinators with participation of more than 10 international and regional lenders. Local support was further bolstered by Chile’s economic development agency, Corfo, which contributed US$35.9m through Banco Bice.
Among the projects' sustainable attributes, all the energy will be supplied by renewable sources, making it compliant with the Equator Principles/IFC guidelines. The loan has been designated as green and received a SQS2 sustainability quality score (very good) from Moody’s.
“This project is innovative because it’s divided into two different projects. You have the same bank group on both sides. And the construction on both sides is related so you need to make it work together. It’s a project that is also sustainable: 100% of the energy comes from renewables,” said Alexandre Potiron, vice-president at BNP Paribas.
The Aguas Pacifico desalination plant will deliver water to industrial clients, utilities and local communities, addressing a mix of industrial and municipal needs. Its multi-client, multi-purpose design sets it apart from other desalination plants in Chile, which primarily serve mining operations in the north.
The project’s second component, the San Isidro Quilapilun aqueduct, ensures a reliable water supply for Anglo American Sur’s Los Bronces mine while expanding access to other users. This dual-purpose infrastructure is critical for sustaining both industrial productivity and local livelihoods in Chile’s central region.
“Project Aconcagua is a unique project. It has ESG features and it’s complex. It’s also a sizeable product because the financing is US$860m but the project is US$1.2bn,” Potiron said.
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