June 27, 2017 / 5:30 PM / a year ago

UPDATE 1-Brazil's São Paulo state to market CESP sale in July roadshow

(Adds details on sale process)

SAO PAULO, June 27 (Reuters) - Brazil’s São Paulo state will send officials and advisors to China, Europe and North America in July to meet investors about the privatization of state-controlled power firm CESP, a source with knowledge of the plans told Reuters on Tuesday.

CESP, or Cia Energética de São Paulo SA, manages three hydroelectric dams with a combined capacity of 1.65 gigawatts. Brazilian groups are also being contacted, said the person who is not authorized to speak publicly about the matter and requested anonymity.

Cesp sale price will take into account expected compensation from the federal government for expired and yet-to-expire operating licenses for some power generation assets from 2020 to 2028.

The government estimated the new controlling shareholder would receive 1.95 billion reais ($586 million). The contract will have a clause saying that if the new controlling shareholder gets a higher compensation from the federal government, the São Paulo state will be entitled to receive the difference.

The state is suing the federal government to receive 8.25 billion reais in compensation.

Preferred shares in Cesp have jumped 44 percent over the last year, since the São Paulo state government began studies into selling a controlling stake in the power company. Its shares rose 0.2 percent in afternoon trading in Sao Paulo, to 15.29 reais. ($1 = 3.3257 Brazilian reais) (Reporting by Luciano Costa; writing by Tatiana Bautzer and Marcelo Teixeira; Editing by Richard Chang)

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