Energy companies to draw up to R$30bn in M&A deals
In a year that started out marked by high volatility in the markets and now pressured by the bankruptcy of banks in the United States and a crisis at Credit Suisse, the traditional European lender bought by UBS, merger and acquisition deals in the electricity sector in Brazil remain strong, with several assets for sale, and are expected to reach R$25 billion to R$30 billion in the coming months.In recent months, giants in the sector and investment managers have put their businesses up for sale, especially in power generation and distribution, with renewable assets being the majority.In the investment banks’ package, at least seven important businesses may change hands or receive contributions from new investors. For example, Brookfield, a Canadian investment bank, announced it will divest part of its renewable power business, grouped in Elera, and has already attracted interested buyers.Enel is also selling Companhia Energética do Ceará (Coelce), a transaction that may range between R$6 billion and R$8 billion, sources say. The Italian company has also hired a bank for the sale of part of the group’s renewable assets, sources say.Another company that seeks to sell part of its business is Neoenergia, owned by Spain’s Iberdrola, which has hired banks to find an investor for its transmission business, an M&A deal of more than R$2 billion, according to people who follow the matter.Eneva is also driving this movement. The company is looking for a strategic or financial partner for its platform of renewable power assets. The move aims at opening space to capture future opportunities in the market. PEC Energia also wants to attract an investor to inject money in new wind power projects, sources say.The line is long. French company EDF is also looking for a buyer for its Folha Larga wind project, as is Atlas, which wants to sell its solar portfolio, sources say.On São Paulo-based banks’ table, with different sale formats or in the search for investors, power companies are likely to prop up M&A activity in the country. While Enel is getting rid of non-strategic assets in Latin America and Europe to reduce its heavy debts, Brookfield is seeking to renew its portfolio by selling more mature assets. Eneva and Pec Energia are seeking investors to raise new renewable projects.Considered to be more resilient, the power industry is not being contaminated by market pessimism, especially in the capital markets, and by the less optimistic growth perspectives...
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