Brazil power firm CPFL sees Chinese investment boosting expansion
(Adds CEO comments, context)
By Luciano Costa
SAO PAULO, Jan 24 (Reuters) - CPFL Energia, Brazil's largest private power company, is eying acquisitions in power generation and distribution as an investment by China's State Grid boosts its growth plans, Chief Executive Officer André Dorf said on Tuesday.
State Grid Corp closed its acquisition of a controlling stake in CPFL Energia SA and its subsidiary, CPFL Energias Renováveis SA, on Monday for 17.36 billion reais ($5.49 billion).
"By having State Grid in the controlling bloc we boost our growth possibilities," Dorf said. "There are a number of opportunities the company could explore ahead now that we have a shareholder with access to capital, one that understands the sector and has appetite for growth."
Brazil's power sector is going through a wave of consolidation as several companies face tight financial conditions during the hardest economic downturn in generations.
The amount of assets up for sale is large and players with access to foreign capital hold the advantage since local credit is scarce and expensive.
CPFL Energia operates in generation, transmission, trading and distribution of energy. It concentrates its presence in the richer center-south region of Brazil, where it would like to expand, Dorf said.
That is why he is not keen on taking part in the sale process announced by state-controlled power company Eletrobras of six power distribution companies in the North-Northeastern part of the country.
"Of course, everything depends on the price, but under normal conditions assets that are closer to our operations would make more sense to us."
OPENING MARKETS
Dorf said the plan in power generation is to target assets where the company could have a controlling stake, dismissing acquisitions of minority shareholdings. Some power companies in Brazil are looking to lure investors to take smaller chunks of their businesses.
Besides the Chinese financial muscle for acquisitions, Dorf says the new controlling shareholder will play an important role in improving technology.
He believes State Grid would provide CPFL with more modern equipment and resources to upgrade installations.
Analysts have said the Chinese acquisitions in Brazil are in part aimed at opening markets for their equipment and engineering services.
State Grid has other projects in Brazil, including two giant transmission lines to link the huge Belo Monte dam in the Amazon to the consuming area in the center-south region.
Another Chinese company, Three Gorges, has also made strides in Brazil after a flurry of acquisitions. It is already the second-largest power generator, after Eletrobras.
(Writing by Marcelo Teixeira; Editing by Chizu Nomiyama and Paul Simao)
