Eletrobras sets the share price at R$42 and discloses details of its privatization transaction

Eletrobras has taken another step towards its privatization through a capitalization of BRL 33.6 billion (US$ 6,855 million) with the sale of new shares, whose value was fixed at BRL 42 last Friday (June, 10). With the offer, the Federal Government’s interest in the company decreased to 37% of its total capital.

With the sale of part of the Brazilian Development Bank – BNDES’s interest and the issuance of new shares, the Federal Government is no longer Eletrobras’ contolling shareholder – although it now holds a “golden share”. The Federal Government and BNDES decrease their stakes from 68.6% of the common shares to 40.3%, which represent 36.9% of the total capital of the company.

Eletrobras’ capitalization is the second largest in the country’s history, only behind the Telebras´ privatization in 1998, which generated US$ 18,948 million in share sales.

In legal terms, Federal Law # 14,120/2021 has made significant changes to the legislation as to enabe the privatization of the sixty-year-old state-owned company, including limiting the voting power of any Eletrobras shareholder to 10% of the capital. This categorizes the company as a “true corporation”, which, in practice, reduces the interference of the majority partners, granting more autonomy and stability to Eletrobras.

Furthermore, the statute also has determined that to buy more than 50% of the shares it is necessary to pay three times the maximum value of the last two years. The intention was to prevent the company from a nationalization attempt by the next governments in the future, affording investors and the market more legal certainty with respect to the privatization that is being carried out.

Out of the BRL 33.6 billion raised with the sale of shares, BRL 3 billion has come from retail investors, BRL 6 billion from workers who used their severance funds, and BRL 4.5 billion has come from current shareholders, such as Banco Clássico and 3G Radar, which have acquired the shares in the priority offering.

With its privatization, it is expected that Eletrobras will regain its investment capacity and expand its activity into other renewable energy sectors, such as wind and solar, possibly meaning, given Eletrobras’s size and representativeness, the increase of investments in several segments of the Brazilian electrical sector as a whole.