Partners of Brazil’s Neoenergia meet to decide on whether launch IPO

Rio de Janeiro —  The partners of Neoenergia, Brazil’s second-largest energy distributor which is controlled by Spanish electricity company Iberdrola, met on Monday in Rio de Janeiro to decide on whether or not to launch an Initial Public Offering for the firm on the Sao Paulo Stock Exchange.

The extraordinary general assembly of the firm’s Administrative Council began at 10 am with the participation of the advisory representatives from Neoenergia’s three partners: Iberdrola, with its 52.45 percent share, Banco do Brasil (9.34 percent) and the Previ pension fund (38.21 percent).

The assembly’s decision will only be released in a communique from Brazil’s Securities and Exchange Commission (CVM) and after the conclusion of market negotiations at the Sao Paulo Stock Exchange on Monday, Neoenergia spokespeople told EFE.

“We’re in a period of silence and so (nobody) may comment on the stockholders’ meeting,” the source said.

The assembly was convened mainly so that stockholders could approve the launching of an Initial Public Offering that would allow the company to be listed on the Sao Paulo Stock Exchange.

Spain’s Iberdrola wants to do an IPO of its Brazilian unit - Neoenergia - on the Sao Paulo bourse without losing voting control after trying without success to do an IPO of the unit in 2017.

The shareholders will also have to approve sending the CVM a petition for the IPO and other related matters.

In this new attempt to get Neoenergia’s shares onto the Sao Paulo market, Iberdrola wants to list the firm without losing control while Banco do Brasil has already said that it intends to sell its entire stake in the company.

Previ, which is the pension fund for Banco do Brasil employees, has expressed interest in removing the firm from the market but still has not decided whether it will maintain its current participiation or sell off some of its shares.

Banco do Brasil, the largest bank in the South American nation, said the share sale would “depend on favorable financial market conditions domestically and internationally.”

In late 2017, Neoenergia scrapped an IPO after Banco do Brasil and Previ refused to accept the price range set by underwriters, arguing that the sale would generate proceeds that were below their expectations.

The firm has four distributors - Coelba, Celpe, Cosern and Elektro - which have a total of 585,000 km of power lines and provide electricity to 34 million people, almost 20 percent of Brazil’s population.

In terms of power generation, the group can produce 4.5 gigawatts of electricity and covers almost 1,000 municipalities spread across 836,000 square km (about 321,000 square miles).

Neoenergia operates in 16 of Brazil’s 27 states and owns electricity generation, transmission, distribution and marketing units.