Alupar Lures $421 Million in Region’s First Power IPO Since 2008

Alupar Investimento SA, a Brazilian electricity transmission and generation company, raised $421 million in South America’s first initial public offering by a power utility since the Lehman Brothers bankruptcy in 2008.

Alupar, based in Sao Paulo, raised 851 million reais ($421 million) after selling 46 million units comprising one voting share and two preferred shares at 18.5 reais each, the low end of its target range, according to data posted on the website of Brazil’s securities regulator late yesterday. The units are slated to start trading in Sao Paulo on April 24.

The sale comes as Brazil targets electricity rate cuts of as much as 32 percent this year, while distributors struggle with surging costs for power generated in thermal plants, which have been operating on government orders since October to compensate for low water levels at dams.

Eight electricity companies held IPOs in South America in the past decade, five of them Brazilian, according to data compiled by Bloomberg. The region’s last offering was from Colombia’s Empresa de Energia de Bogota SA, which listed on July 8, 2008, two months before Lehman’s bankruptcy, the data show. Brazil’s Transmissora Alianca de Energia Eletrica SA raised 1.5 billion reais in a secondary share offering on July 18.

Alupar plans to use 80 percent of proceeds from the sale to acquire new concessions and assets and 20 percent to buy existing transmission lines or generation plants, according to the offering’s prospectus.

Banco Itau BBA SA, the wholesale arm of Itau Unibanco Holding SA (ITUB4), the biggest Latin American bank by market value, acted as lead coordinator of the offer.

To contact the reporters on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.