November 27, 2019 / 11:02 PM / 8 days ago

Brazil's IG4 Capital to buy controlling stake in Peru's Grana y Montero

SAO PAULO (Reuters) - Brazilian private equity firm IG4 Capital has agreed to acquire a controlling stake in Peruvian construction conglomerate Grana y Montero SAA (GRA.LM), according to a company statement and securities filing on Wednesday.

IG4 Capital, which has around $550 million under management in two funds, is buying out the families that currently control Grana y Montero.

In the securities filing, Grana y Montero said IG4 made an offer to buy up to 25% of the company’s capital owned by its founding families and former executives.

After the deal is concluded and approved by Peruvian authorities, IG4 will launch a tender offer in the same terms to minority shareholders.

The deal value was not disclosed, but Grana’s market capitalization is around $335 million.

In a statement to Reuters, IG4 Capital, which owns Brazilian sanitation company Iguá Saneamento, confirmed the deal signing but declined to elaborate on the details.

The construction conglomerate founded 86 years ago, has $1.2 billion in annual revenue, $165 million in EBITDA and 14,000 employees in 13 Latin American countries.

Grana y Montero controls Line 1 of the Lima subway, three toll roads totaling 628 miles (1,011 km), and owns oil exploration fields, one natural gas processing plant and a water treatment station.

Grana y Montero was one of the largest partners of Brazil’s scandal-plagued conglomerate Odebrecht SA in Peru, and was targeted by Peruvian prosecutors amid widespread corruption allegations.

Two sources with knowledge of the matter said a condition for the deal to be concluded was an agreement with prosecutors to exempt the acquirer of Grana y Montero from fines related to corruption investigations.

IG4 Capital has already acquired other assets related to fallout from corruption probes. Iguá Saneamento used to be controlled by Grupo Galvão, one of the construction groups targeted in Brazil’s largest-ever corruption probe.

IG4 Capital is headed by founder and Chief Executive Paulo Mattos and other partners in Brazil. The private equity firm opened an office in Santiago earlier this year to analyze investments in the Andean region, with a team led by Pablo Kuhlenthal.

(This story corrects name of former owner of Igua Saneamento to Grupo Galvao in paragraph 11 instead of Queiroz Galvao)

Reporting by Tatiana Bautzer; Editing by Sandra Maler and Tom Brown

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