Brazil’s Santo Antonio Said to Attract Three Gorges, Brookfield

  • Hydropower generator’s owners selling up to $3.1 billion stake
  • State Grid Corp. of China also competing for control

China Three Gorges Corp. and State Grid Corp. of China are among suitors that submitted offers for control of Brazilian hydropower generator Santo Antonio Energia SA, people with knowledge of the matter said.

Brookfield Asset Management Inc. is also bidding for the majority stake being sold in Santo Antonio Energia, the people said, asking not to be identified as the information is private. The deal could fetch as much as 10 billion reais ($3.1 billion), depending on the exact amount the shareholders ultimately decide to sell, according to the people. First-round bids were due this week, they said.

Santo Antonio Energia said in June that some shareholders informed the company they plan to sell their stakes. Cia Energetica de Minas Gerais, known as Cemig, Odebrecht Energia do Brasil SA, SAAG Investimentos SA and Caixa FIP Amazonia Energia own a combined 61 percent stake, according to the company’s website.

Chinese companies are ramping up investments in Latin America’s largest economy as Brazilian firms look for suitors to help them ride out the nation’s longest recession in decades. China has become the biggest foreign buyer for Brazilian assets with $4 billion of announced transactions this year, trumping the U.S. and the U.K, data compiled by Bloomberg show.

Economic Downturn

Brazil’s economic downturn and the recent drought could deter some bidders from offering high prices for hydropower assets, one of the people said.

A press officer for Odebrecht Energia confirmed that there are ongoing negotiations with several companies for the sale of its 28.6 percent stake in Santo Antonio, but declined to comment further. A representative for Santo Antonio said the process is being led directly by shareholders and is therefore outside of the management’s knowledge.

Representatives for Brookfield, Cemig and State Grid declined to comment. A representative for Three Gorges didn’t respond to calls and faxes seeking comment.

Generating Capacity

The Santo Antonio hydropower plant has 3,150 megawatts of generating capacity, which is sufficient for 40 million people, according to its website. Its total investment amounts to 16 billion reais.

Brookfield and China Three Gorges are also in the running for other Brazilian power assets that are on the block. Duke Energy Corp. invited Brookfield, China Three Gorges and French utility Engie SA to submit binding bids for its Latin American power assets by end of this month, people with knowledge of the matter said in August. 

Half of the assets being sold by Duke are in Brazil, with the remainder in Argentina, Chile, Ecuador, El Salvador, Guatemala and Peru. Hydroelectric plants make up about two-thirds of the portfolio, Duke said in February.

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