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State Grid, Enel Place Bids for Brazil's Renova Stake: Sources

Three Gorges, Renova and Light did not have an immediate comment. BNDESPar did not comment.

Published: 30th April 2016 08:59 AM  |   Last Updated: 30th April 2016 08:59 AM   |  A+A-

SAO PAULO0: State Grid Corp, China Three Gorges Corp and Italy's Enel SpA have placed bids for a 16 percent stake in Brazilian renewable energy company Renova Energia SA, which needs fresh capital following a failed asset sale last year, three sources with direct knowledge of the matter said on Friday.

The two Chinese companies and the Italian utility are among a group of interested parties in the stake, which is owned by Brazilian power distribution company Light Energia SA, said the sources, who requested anonymity to speak freely about the process.

Light began looking for buyers for the Renova stake after SunEdison Inc withdrew a $250 million bid last December. Investment firms TPG Capital LLC and Canada's Brookfield Asset Management Inc were also among bidders, two of the sources said.

Renova's stake is the latest of a list of Brazilian renewable energy and electricity assets that have been put up for sale after years of rampant debt-taking and a two-year long recession hampered operations. Often seen as resilient during downturns, the industry is struggling with declining electricity consumption and the highest borrowing costs in nine years.

According to the third source, the stake sale may be accompanied by an issuance of new shares to boost capital. Other shareholders may join Light in exiting their stakes in Renova, the first source said. They could include BNDES Participações SA, the investment arm of state development bank BNDES that is commonly known as BNDESPar, both sources said.

Three Gorges, Renova and Light did not have an immediate comment. BNDESPar did not comment. State Grid, Brookfield and TPG declined to comment. BNDESPar owns 9 percent of Renova.

Enel denied the information.

"At present, we are not focussed on this company, but we keep an eye on the evolution of the industry," said the Italian firm.

CHINESE INVESTMENTS

Shares of Renova gained 0.5 percent to 13.87 reais in late Friday trading in São Paulo. Light rose 1.5 percent to 10.46 reais.

In recent years, State Grid and other Chinese companies turned into aggressive buyers of Brazil energy assets. For instance, State Grid has spent $1 billion buying Brazilian assets, or 8 percent of the $12.2 billion worth of global acquisitions in the period, according to Thomson Reuters data.

Both Renova and Light are controlled by Cia Energetica de Minas Gerais SA, the power holding company controlled by the Brazilian state of Minas Gerais. Renova needs about 10 billion reais ($2.9 billion) to complete 2 gigawatts in domestic wind and solar power projects that remain under development.

São Paulo-based investment-banking firm Grupo BTG Pactual SA is advising Light on the deal, the sources said.

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