- Enel lost out last week on sale of another Brazil utility
- ‘We’ll be trying again’ for distribution company, Starace says
Enel SpA is considering a bid to acquire AES Corp.’s Sao Paulo utility unit AES Eletropaulo.
Italy’s largest utility is seeking to expand in Brazil, especially in power distribution, Chief Executive Officer Francesco Starace said in an interview Tuesday at Bloomberg’s headquarters in New York.
Enel lost a bid last week to acquire another AES unit, AES Sul, which operates in Rio Grande do Sul state. The Brazilian utility CPFL Energia SA agreed to buy the unit for $464 million.
“The valuations are really finally getting to the right level,” Starace said. “We participated in the Rio Grande do Sul transaction. We didn’t win this one. Now there is Eletropaulo coming, there’s a lot of distribution coming. We’ll be trying again.”
An AES spokeswoman in Brazil didn’t immediately respond to requests for comment Tuesday. Despite speculation about a deal, the company has said this year the unit, formally known as Eletropaulo Metropolitana Eletricidade de Sao Paulo SA, isn’t for sale.
Eletropaulo is Brazil’s biggest power distributor, delivering about 10 percent of the nation’s electricity, according to its website. It has rights to provide power in 24 municipalities in the Sao Paulo metropolitan region.
It’s also drowning in debt, and Standard & Poor’s lowered its corporate credit rating last month in anticipation of an electricity surplus on the spot market. Power consumption in Eletropaulo’s area may decline by about 5 percent in 2016, according to S&P.
“We’re looking at distribution companies,” Starace said. “That’s what we like to have.”