British Investor Seeking to Buy Eletrobras Stakes in Wind Farms

(Bloomberg) -- A U.K. power utility is in talks with two local partners of Brazil's state-run utility Eletrobras to acquire minority stakes in about 640 megawatts of operating wind farms.

The U.K. company has signed memorandums of understanding to invest in the local operators, in exchange for the right to make a first offer on the wind assets when Eletrobras officially puts its holdings up for sale, according to Paulo Dalla Nora, a partner at FIR Capital, a Brazilian venture capital company that's structuring the deals. Nora declined to identify the potential buyer or provide other details because the negotiations are private.

Eletrobras is seeking to sell assets to ease its debt load of about 46 billion reais ($14.7 billion). The utility owns stakes in 110 special-purpose entities that own power plants that Chief Executive Officer Wilson Ferreira Jr. plans to sell this year. He estimates that may generate as much as 4.5 billion reais.

“Foreign investors are interested in Eletrobras's wind power assets as it is an entry point for them,” Nora said in an interview in Sao Paulo. “Our focus is privatization in the Brazilian renewable energy market and the government will succeed in selling these stakes.”

Eletrobras owns 49 percent of the wind farms, and is in the process of evaluating the assets before putting them up for sale. The two local operators own the rest, and are entitled to have priority in making an offer when their utility partner is ready to sell its share. The holdings comprise nine wind farms organized under 12 of its 110 special-purpose entities. Eletrobras didn't respond to requests for comment. FIR Capital will get stakes in the assets of as much as 10 percent.

These aren't Eletrobras's only wind holdings. It has 49 percent stakes in a total of 60 special-purpose entities that own wind farms across Brazil. It's seeking to sell its share of about 1,600 megawatts of operating capacity, which Nora said may be worth as much as $700 million.

Besides the operating wind farms, the two local operators have another 820 megawatts of planned wind farms that have approval and are ready to be built.

“Foreigners want to keep investing after acquiring the assets,” Nora said.

To contact the reporter on this story: Vanessa Dezem in Sao Paulo at vdezem@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Will Wade, Susan Warren