Privatization of Brazil's Emae expected to attract large power generators

The privatization São Paulo hydropower company Empresa Metropolitana de Águas e Energia (Emae) should attract large power generators, Arlindo Souza, an analyst at Levante Corp, told BNamericas. 

Emae is a publicly traded company controlled by Brazil’s São Paulo state with a 39% stake. 

Souza said one of the main candidates to buy the company in the auction scheduled for April 19 is Auren Energia. 

"Auren has a very strong balance sheet to make an acquisition like this and has experience with privatization processes," said the analyst.

The company, formerly known as Cesp, was partially privatized by the São Paulo government in 2018.

According to Souza, other potential interested parties include Eletrobras – which also holds 39% of Emae's shares – along with Equatorial Energia and Copel. 

Local newspaper Estadão has also named Âmbar, CPFL Energia and CTG as possible bidders. 

Emae operates the Henry Borden, Porto Góes and Rasgão hydroelectric plants, as well as the Pirapora small hydro plant. 

It also operates the crossing service at three points of the Billings dam, which will be maintained free of charge by the new controller.

Emae's market value is around 2.3bn reais (US$460mn). The company has installed power capacity of 961MW. 

According to the public notice issued by the São Paulo government on Monday, the winner of the auction will be the group that offers the highest premium above the minimum price set of 52.85 reais per share. 

A total of 14.7mn shares will be offered, of which 14.4mn are owned by São Paulo state and the other 350,000 by São Paulo subway operator Metrô.

The company's employees will be offered approximately 3.6mn shares at the minimum price, representing around a 10% stake. If there are any leftover shares, the new controlling shareholder is obliged to buy them at the auction price.