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IFC Invests US10 Million in Vatia to Promote Renewable Energy and Support Colombia’s Climate Goals

Bogota, Colombia, May 2nd, 2022—A new investment will help diversify Colombia's energy sources while promoting renewable energy projects and boosting economic resilience in the country. IFC's US$10 million investment in the form of preferred equity in Vatia, a leading Colombian electricity retailer and aggregator, will improve access to cleaner energy, contributing to the country's climate commitments.

In its first engagement with a retail power aggregator globally, IFC will also assist the company to obtain financing of up to $36 million in long-term debt. IFC's support will allow Vatia to acquire greenfield solar assets and strengthen its capital position, expanding and diversifying its generation capacity in Colombia. This will help displace carbon-intensive and more expensive thermal generation, reducing around 55,000 tons of CO2 emissions equivalent each year. In addition, IFC's investment will enable smaller businesses and commercial and industrial users to implement energy efficiency plans and additional savings.

As part of its energy policy, aimed at ensuring energy security, low prices, and reducing greenhouse-gas (GHG) emissions, Colombia aims to achieve 25 percent penetration of non-conventional renewable energy (NCRE) by 2030. Despite considerable potential for NCRE, the resources remain largely untapped—less than 0.5 percent of the energy mix in the country.

Luis Fernando Sanvodal, Vatia's CEO, said: "We welcome IFC's long-term funding that is not readily available in a domestic market given the nascent business model. It will help demand aggregators like us play a key role in promoting NCRE, either through our own generation or by acting as off-takers for new projects. Additionally, aggregators can provide long-term contracts, a key hurdle in the Latin America and the Caribbean (LAC) region, with high hydro penetration and price volatility depending on weather patterns."

IFC will also ensure the adoption of corporate governance and environmental and social practices in line with IFC's Performance Standards.

Adil Marghub, IFC head of infrastructure and energy for Latin America and the Caribbean, said: "Globally, end-users increasingly bypass traditional incumbents and get their energy from alternative sources, either directly from generators or retail aggregators. By supporting a leading market player, IFC is promoting a crucial change in the market structure, with retailers playing an increased role in the energy market. This will allow Vatia to serve more customers while highlighting the financial viability of the energy retail aggregation model in the region, contributing to the country's energy supply diversification."

Colombia is IFC's second-largest committed portfolio in LAC and seventh largest worldwide, with over US$3 billion in new financing over the past five years alone. In the fiscal year ended in June 2020, IFC's long-term investments in the region totaled a record $7.1 billion, including a record US$4 billion mobilized from other investors, enabling investments to foster sustainable growth across the region, create jobs, and fight the impacts of the COVID-19 pandemic.

About Vatia
Vatia is an energy retailer and generator in Colombia, concentrated in the regulated market, with more than 33,000 users and an annual demand of around 1,300 GWh/Year, of which 400 GWh/Year come from NCRE sources. Vatia promotes the reduction of energy consumption through energy efficiency programs and expects to generate revenues of US$162 million during 2022.
 
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record US$31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.

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