Centrais Eletricas Brasileiras S.A.as the company is formally known, confirmed in the early hours of Friday that the offer was priced at 42.00 reais per share, for a total of 29.29bn reais ($5.97bn).
The total includes a primary offering of new shares issued by the company and a smaller secondary offering of shares held by state development bank BNDES.
If the over-allotment option -or “greenshoe” option- is also taken into account, which aims to stabilize the price and increase supply by 15%, the total amount of the Brazilian electricity company amounts to 33,680 million reais (6,870 million of dollars).
The privatization of the utility company was seen as crucial for President Jair Bolsonaro, who has so far delivered few of the state asset sales he promised before taking office in 2019.
Bolsonaro, a defender of the free market, will face the former president Lula da Silva -a declared opponent of privatization- in the first round of the presidential elections on October 2.
The 42-real price represents a 1.17% discount to the closing price of Eletrobras shares on Thursday.
On Friday morning, both preferred and common shares of Eletrobras were down nearly 5%, making the company a major drag on Brazil’s Bovespa stock index, which fell 1.9%.
According to a third source, demand for the deal was strong, above $14 billion, with investors including pension funds, state investors, long-term portfolios, hedge funds and retail investors.
The demand allowed the sale of the additional allocation in the largest offer of shares in Brazil in 12 years, since the capital increase of Petrobras in 2010.
“The high demand for the offer of additional shares is another positive step in the company’s privatization process,” said Rodrigo Crespi, an analyst at Guide Investimentos.
The State’s participation in the company will go from 72% to 45%.
Prior to the offering, players such as Singapore state-owned investor GIC, Canada Pension Plan Investment Board (CPPIB) and Brazilian asset manager 3G Radar were expected to be among Eletrobras’ largest shareholders.
Unlike other large sales of state assets, no individual investor, foreign or domestic, was able to gain control of the company through the process, which set a ceiling on voting rights of 10% for individual holdings. Eletrobras has not yet confirmed its new shareholding structure.
Source: Ambito
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