Arroyo is an independent, energy investment firm employing a value-added strategy focused on the commodity-related agreements around power generation and midstream assets. From 2003 through 2014, the Arroyo Team invested and managed in excess of $600 million on behalf of its sponsors—Bear Stearns and J.P. Morgan. The Arroyo Team developed and crafted its investing experience in the energy industry at companies such as Southern Company, El Paso Corporation, Koch Industries, Mirant Corporation, Gas Atacama SA and Enegás SA.
A primary value driver for Arroyo is the ability to transform the characteristics of an asset into a marketable commodity for the logical users of the asset. With this strategy, Arroyo focuses on originating, restructuring and extending the commodity agreements related to each asset it owns.
A primary differentiator in Arroyo’s strategy is to create opportunities for Arroyo to monetize the embedded commodity options inherit within each investment. In addition to the operational services offered by each asset, associated commodity agreements are often under-negotiated and under-utilized. Arroyo focuses on identifying and realizing value trapped within these agreements.
Through a deep understanding of regulatory regimes, market structure operational capabilities of the assets, Arroyo seeks to optimize the operating characteristics of each asset as well as seek out underutilized and misunderstood structural opportunities within the market.
EXPANSION AND DEVELOPMENT
By leveraging existing infrastructure or market position, Arroyo identifies opportunities where it expects to be favorably positioned to construct or expand facilities in order to realize additional value.
Arroyo will make energy investments in North and South America. In Latin America, its primary focus will be within the countries comprising founding members of the Pacific Alliance—Mexico, Chile, Peru and Colombia.
The Arroyo Team seeks to identify energy asset investments with predictable near-term cash flows together with opportunities for material improvements in financial performance. The Arroyo Team’s diverse expertise gives it the ability to due diligence and execute M&A transactions in-house in expedited time frames.
Through the due diligence process, the Team develops a commercial business plan with the goal of realizing upside value upon acquisition. Realization of the upside is typically achieved through origination of new supply or commodity agreements or the restructuring of existing commodity agreements.