RIO DE JANEIRO -- Brazil's largest pension fund made its eighth energy sector acquisition last month when it bought an 18% stake in the Companhia Energetica de Pernambuco, or Celpe, the distribution company of northeastern Pernambuco state.
The pension fund of the state-owned Banco do Brasil SA, known as Previ, made the acquisition as part of a consortium led by Iberdrola SA of Bilbao, Spain, that paid 1.78 billion reals ($1 billion) for the company.
The consortium bought in total an 89.6% common voting-share stake in Celpe: Iberdrola took a 60.9% stake; Previ, 17.9%; and the Banco do Brasil, 10.8%.
The consortium previously had purchased the Companhia de Eletricidade da Bahia, the distributor in neighboring Bahia state; and the Companhia Energetica do Rio Grande do Norte, the distributor in neighboring Rio Grande do Norte state.
The latest purchase gives the consortium a total of 5.3 million customers and 80% of the energy distribution market in the northeast, the region with the fastest growing energy demand in Brazil, according to Andre Segadilha, the energy-sector analyst for Rio de Janeiro-based Banco Brascan investment bank, Iberdrola's adviser in the sale.
Previ has, as part of consortiums, also bought stakes in energy distribution companies in the south in Rio Grande do Sul and Santa Catarina states, and in the southeast in Sao Paulo and Espirito Santo state.
Previ is investing in power companies because increased demand for energy means that dividend yields/payouts on energy companies are high in Brazil and will be even higher when new owners implement cost-cutting measures, energy sector analysts said.
The Iberdrola-led consortium paid the government's minimum asking price for Celpe. It would have had to pay more had it bid against a consortium led by Kansas City, Mo.-based UtiliCorp United Inc. That consortium reportedly included the Fundacao dos Economiarios de Seguridade Social, the pension fund of the government's Caixa Economica Federal federal savings bank. But the Utilicorp-led consortium didn't bid, reportedly because some members dropped out at the last minute, leaving the U.S. firm with 75% of the buying costs in what would have been its first investment in Brazil.
