Chinese power conglomerates becoming dominant forces in Brazil

viernes 19 de agosto de 2016 16:43 GYT

By Luciano Costa

SAO PAULO Aug 19 (Reuters) - Chinese power conglomerates are gradually becoming the dominant force in Brazil's electricity industry, where high debt, a harsh recession and less stringent takeover barriers than in other major markets have stoked a wave of acquisitions.

Since the start of 2015, Chinese companies have been the protagonists in three of the six largest announced electricity mergers in Brazil, according to Thomson Reuters deals intelligence data. The number is poised to grow significantly in the coming months as debt-laden targets speed up their sale for prices and conditions deemed as attractive by the Chinese.

Still, growing appetite does not mean State Grid Corp of China, the world's largest utility, or other Chinese peers will overpay for Brazilian assets, said Humberto Gargiulo, president of Upside Finance, which advised State Grid in prior bids for Brazilian transmission lines.

On July 1, State Grid agreed to buy construction conglomerate Camargo Correa SA's 23.6 percent stake in CPFL Energia SA for 5.9 billion reais ($1.8 billion). State Grid will have to extend the same offer to CPFL's remaining shareholders, which might quadruple the deal's value.

The CPFL deal has helped re-price Brazilian utilities' shares, which this year have gained 49 percent after almost four years of declines.

Likewise, China Three Gorges Corp is analyzing a number of assets up for sale, people with direct knowledge of the situation told Reuters. No move is imminent, the people said, because Three Gorges wants to carefully assess the implications and value of any deal.

"There are multiple opportunities and potential purchases that we are analyzing ... we want to become a relevant player," Li Yinsheng, the chief executive officer of the local unit of Three Gorges, the world's largest hydroelectric power producer, told Reuters in an interview, without elaborating.

The stampede of Chinese investment into Brazil's beleaguered power industry underscores efforts by the world's No. 2 economy to seek new sources of growth overseas. Proposed Chinese power takeovers have encountered increased opposition in North America and Europe and Australia, adding to Brazil's current allure.   Continuación...