With AES Tietê merger, Eneva aims to create national giant
The merger proposal made by Eneva to AES Tietê could potentially create the biggest private-sector power generator controlled by Brazilian investors in the country's market. Eneva wants to replicate its governance model in the new company, with dispersed equity and no shareholders' agreement.
"The bottom line is [that if the deal wins approval] we will jointly become the second-largest listed [power generation] company [after Engie Brasil Energia, controlled by France's Engie]. But perhaps the biggest nationally owned company," Eneva Chief Executive Officer Pedro Zinner told Valor. "It consolidates the position of a Brazilian company in an important sector like the Brazilian power sector."
Regarding governance, the executive explained the idea is to consolidate the concept of "true corporation," meaning a business without controlling investors and shareholders' agreement. "What exists are a few anchor shareholders holding relevant stakes in the business. And the idea is to increasingly move in that direction, always aiming to maximize shareholder value," he said.
As Valor reported on Monday, if the proposal wins approval in the general meeting of both companies under the current terms, investment fund Cambuhy Investimentos (of the Moreira Salles family) and BTG Pactual will get 17.8% each of the newly merged company. AES Corporation will receive 5.5%, the Brazilian Development Bank (BNDES) will get 6.5% and Eletrobras 1.8%.
The new governance model will even allow the BNDES and AES Corporation to reduce their stakes or even sell them all together. In practice, both will be allowed to sell their shares at any point in the market.
Eneva had been considering for about a year the transaction proposed on Sunday. From the power-generation standpoint, the business makes sense given how complementary the portfolios of both companies are and by asset-management risk mitigation opportunities. Eneva is the biggest thermal-power generator in Brazil with capacity for 2,800 megawatts (MW), of which 2,200MW already are operating, and the rest is slated to be installed by 2024. AES Tietê, for its part, has about 3,400MW, of which 80% is generated from hydropower dams and the rest from wind and solar sources.
Mr. Zinner said the new company would feature a more predictable cash flow and...
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