Enersis: a turbulent capital increase (B): The role of communication in financial operations

On July 25, 2012, the Superintendency of Securities and Insurance (SVS), Chile’s financial regulator, published a material event notice on its website regarding Enersis, Latin America’s largest private electricity company, controlled by the Italian-Spanish multinational Endesa. The company surprised insiders and outsiders alike by calling an Extraordinary Shareholders’ Meeting (ESM) to vote on a US$8.02 billion capital increase, to be held 50 days later on September 13. It would be the largest capital increase in Chile’s history, for an amount equivalent to 13.3% of the national budget.

Before the operation was announced, there were two views within the company. The Finance Department believed that the operation should go ahead without informing any of the stakeholders, since it was a win-win proposition, all the paperwork was in order, and they only needed to convince 6% of the minority shareholders. Conversely, the Communications Department, aware that Endesa’s entry into the country ten years earlier had been traumatic and had left wounds among the minority shareholders, argued that they should build a consensus before launching the operation. 

Part A presents the dilemma, while Part B describes the events that transpired and how the operation ended, as well as identifying some of the lessons learned.