Rodrigo Viga Gaier, Reuters

RIO
EnergiesNet.com 12 15 2022

Brazil’s state development bank BNDES will no longer sell shares it owns in power firm Eletrobras (ELET6.SA) this year, two sources familiar with the matter said, citing a lack of time for a potential sale of a stake in the company to be concluded as well as worsening macroeconomic conditions.

Eletrobras, Latin America’s largest utility, was privatized earlier in 2022 when the federal government diluted its stake in the firm, but a lock-up prevented additional share sales until early December.

With the deadline reached, markets had expected BNDES to sell part of its stake in the firm, formally known as Centrais Eletricas Brasileiras SA.

Local newspaper Valor Economico reported earlier this month that BNDES was mulling a 7 billion-real ($1.3 billion) sale of its stake in Eletrobras in a block trade.

According to the sources, who spoke on condition of anonymity, the development bank carried out internal assessments on a potential transaction, but the idea did not go ahead

“The bank will not sell these Eletrobras shares, decision taken,” said one of the people close to the matter.

BNDES did not immediately respond to a request for comment.

A second source also said that the possibility was considered, but time was too short and there would also be governance hurdles for the transaction to be concluded.

BNDES holds 74.55 million ordinary shares in Eletrobras directly and 71.96 million through its investment vehicle BNDESPar, according to Refinitiv data.

Selling shares in companies such as Eletrobras, miner Vale SA (VALE3.SA) and meatpackers JBS SA (JBSS3.SA) and Marfrig Global Foods SA (MRFG3.SA) was a major profit driver for BNDES during President Jair Bolsonaro’s administration.

The strategy is likely to change next year, however, as Bolsonaro recently had his re-election bid frustrated by President-elect Luiz Inacio Lula da Silva, who is expected to pause such divestments after taking office on Jan. 1.

Investors have been rattled by some of Lula’s decisions, including tapping a veteran from his Workers Party, Aloizio Mercadante, as the next head of BNDES.

One of the sources said that worsening economic conditions also made it impossible for BNDES to sell Eletrobras shares.

“When you have a big macro change, and that’s what happened now, you need to redo a much of the work,” the source said. “The ‘Brazil risk’ today is much higher, interest rates are higher, so you have to redo and update the internal analyses.”

($1 = 5.3266 reais)

Reporting by Rodrigo Viga Gaier in Rio de Janeiro Writing by Gabriel Araujo Editing by Matthew Lewis

reuters.com 12 14 2022