The entry of Chilean power generator Colbún into the Peruvian market will generate a drop in share value, according to investment bank Santander Global Corporate Banking.

Through a consortium, the firm has acquired 100 per cent of Fenix ​​Power Peru, which owns a 570 MW combined-cycle gas-fired plant.

But the bank said: “Preliminarily, we expect a negative reaction on the stock because they are unattractive valuation (2017E 9.9x FV/EBITDA); we see a certain risk that regulatory changes will occur in Peru, which could jeopardize profitability; and this acquisition limits the possibility of increasing dividends, which would have been a better catalyst, in our opinion.”