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Brazil Finds Investors

Brazil Finds InvestorsBrazil Finds Investors

The Brazilian government awarded licenses for companies to build and operate 6,126 km (3,829 miles) of power transmission lines, finding investors for 21 of 24 lots offered in an auction on Friday.

It was the best outcome for a licensing round of that type since 2012. Brazil’s electricity regulator Aneel, which organized the auction, estimates the new licenses will require investment of 11.6 billion reais ($3.61 billion), Reuters reported.

Local group Equatorial Energia SA was a featured player, snapping seven lots. The company controls two power distribution firms and two large oil-fired thermal power plants in northern Brazil. It has no prior presence in the power transmission sector.

Among other active investors were Canadian asset manager Brookfield, which won three lots in partnership with Spanish company Cymi, and energy firm Cteep, controlled by Colombian holding company ISA.

Chinese company State Grid, which had been active in previous rounds, refrained from bidding.

Brazil’s state-run power holding company Centrais Eletricas Brasileiras SA, or Eletrobras, was also on the sidelines as its management is looking to downsize and to reduce debt.

Brazil’s electric power secretary Fabio Lopes Alves said new conditions set by the government for that type of investment, with improved returns, were key to attracting a larger number of investors.

Brazil has shot from global pariah among investors to emerging market favorite in less than 12 months—and many analysts believe Latin America’s biggest economy could be set for further gains.

Brazil’s real has already strengthened nearly 23% against the dollar this year while the benchmark equities index Ibovespa has gained nearly 41% on the impeachment in August of former leftist president Dilma Rousseff for budgetary violations.

 

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