©Bloomberg/Susana Gonzalez

Pacific Rubiales, the largest independent oil producer in Latin America, is set to be acquired by Grupo Alfa and Harbour Energy in what would be the region’s biggest-ever private equity deal.

The all-cash deal, which could be announced as early as Thursday, will value Pacific Rubiales at C$6.50 a share, or $6.5bn, including $4.8bn of debt, according to people close to the situation. The price represents a 73 per cent discount to the 12-month high of C$24 a share for the Toronto-listed oil and gas company.

Harbour Energy was formed in 2014 as a joint venture between Hong Kong commodity trader Noble Group and US buyout group EIG Global Energy Partners. Alfa already owns approximately 19 per cent of Pacific Rubiales.

“The acquisition is both a value play and a growth play in Latin America and Mexico,” said one person familiar with the transaction. “EIG wants to buy the best assets at the best price in Latin America and Asia and take part in any further regional consolidation.”

The acquisition of Pacific Rubiales would mark the largest buyout of a Latin American energy company since a KKR-led consortium bought energy company Samson Resources for $7.2bn in 2011. That deal was struck before the dramatic slide in energy prices, which has led the US buyout group to value that investment at pennies on the dollar today.

It comes as private equity groups look for bargain investments beyond US shale. Shares in Pacific Rubiales have fallen by about 67 per cent in the past year as a collapse in crude oil prices weighed heavily on its performance.

Pacific Rubiales produces 150m barrels of oil a day, primarily in Colombia and Peru, and has proven or probable reserves of 500m barrels as well as an attractive portfolio of exploration tracts in the region.

The deal will help Alfa, one of the top 10 companies in Mexico by market capitalisation, gain better access to the country’s newly liberalised upstream sector.

The Monterrey-based oil producer first announced that it had entered into exclusive discussions with Pacific Rubiales and Harbour Energy on May 5. Credit rating agency Fitch said the deal would be positive for the company’s credit quality if it received a capital injection aimed at improving its capital structure following the acquisition, which could help stabilise the rating.

Harbour Energy serves as a platform for Alfa and Noble to acquire high-quality energy assets and then possibly roll all of these assets up in a single company that could one day go public. The group plans to expand further in China, possibly with the help of Chinese sovereign wealth fund CIC that has a stake in EIG, is an investor in its funds and also has a small stake in Noble Group.