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U.S. firm to buy up state-owned stake in renewable energy company

. Jul 29, 2020
U.S. firm to buy up state-owned stake in renewable energy company Photo: AES

The renewables sector in Brazil has just gotten a little less state-heavy, with national development bank BNDES accepting an offer from US-based AES Corp to take over its stake in AES Tietê, a renewable energy company that operates hydroelectric plants and wind power parks. AES Corp’s bid for BNDES’ stake, though unsurprising, may be seen as a good omen of foreign interest in Brazil’s renewable energy platform, says Joisa Dutra, director of the Infrastructure Regulation Center (FGV-Ceri), speaking to The Brazilian Report.

</p> <p>&#8220;The [renewables] sector has revealed a certain maturity in its capacity, including in relation to other infrastructure segments,&#8221; explains Ms. Dutra, who is also a former board member of Brazil&#8217;s electricity regulator Aneel, adding that the capacity to attract capital to the sector is hugely welcomed.&nbsp;</p> <p>According to a statement published by AES Tietê this Tuesday, AES Corp presented an offer for an 18.5 percent stake in AES Tietê, which would leave BNDESPar with a remaining stake of 9.9 percent. This move would see AES Corp&#8217;s equity in the Brazilian renewables company rise to 42.9 percent.</p> <p>&#8220;BNDESPar and AES Brasil shall engage in executing the proposal and will keep stakeholders and the market up to date,&#8221; reported the companies on Monday. US-based AES Corp is already a controlling shareholder of the company.&nbsp;</p> <p>Ms. Dutra remarks that the deal has not come as a surprise from either side. The US-based company&#8217;s bid to take over part of the development bank&#8217;s stake is aligned with its global repositioning, she says.&nbsp;</p> <p>&#8220;This hydroelectric platform is coherent with a vision of renewable energy, it has shown good results and attracted investors. There are banks around the world already showing intent to reposition themselves beyond fossil fuels,&#8221; Ms. Dutra explains, adding that she sees this as a natural trend within the <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/06/04/brazilian-energy-sector-expected-lose-over-brl-13-billion/">energy sector</a>. </p> <h2>BNDES picks U.S. firm over domestic bidder</h2> <p>The state development bank chose AES Corp&#8217;s proposal over that of Brazilian energy firm Eneva.&nbsp;</p> <p>&#8220;Besides the fact that AES&#8217; bid was in cash, which is very advantageous for the BNDES at this time, the development bank was allowed to hold on to a larger stake in the company when compared to Eneva&#8217;s offer,&#8221; says Érico de Brito, director at consulting firm Excelencia Energetica.&nbsp;</p> <p>As part of its offer, AES Corp included a proposal to migrate AES Tiete to the so-called &#8220;New Market&#8221; listing segment of the São Paulo stock exchange, reserved for companies with higher levels of corporate governance. According to the statement published this Tuesday, this migration will take place six months following the finalization of the deal.</p> <p>&#8220;It is a relevant consolidation of AES&#8217; position in the Brazilian power generation market, considerably increasing its participation in one of the country&#8217;s largest utility companies,&#8221; Mr. Brito tells <strong>The Brazilian Report</strong>.&nbsp;</p> <p>On Monday, Salim Mattar, the Economy Ministry&#8217;s Privatizations Secretary, used Twitter to comment on the offer, saying the &#8220;state is ceasing to have an investment portfolio to focus on priorities.&#8221; He did not give any further details on the transaction.

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Laís Martins

Laís Martins is a Brazilian journalist pursuing a master's degree in Media and Globalization. Her coverage is focused on politics, human rights, and society. Previously, she worked for Reuters Brasil.

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