Bloomberg News

Bioenergy May Pursue IPO to Fund Brazilian Wind-Energy Projects

November 27, 2011

Nov. 25 (Bloomberg) -- Bioenergy Geradora de Energia Ltda., a Brazilian renewable energy developer, may pursue an initial public offering next year to fund $920 million of wind farms it’s developing in the northeast.

The company may pick an investment bank to underwrite the offering in the first half, Sergio Marques, president of Sao Paulo-based Bioenergy, said today in a telephone interview.

Bioenergy is seeking to sign contracts to sell power from as many as 16 wind farms in the state of Maranhao by the end of the year. Market turmoil in Europe has precluded the company from selling shares sooner, he said.

“I believe that in the second half of next year a window will open for the offering,” Marques said. “Today, the market’s bad.”

Bioenergy may appeal to investors because it has experience selling power on Brazil’s free electricity market, which is “necessary to be successful” for a wind developer, Marcos Severine, an analyst at Sao Paulo-based Itau Unibanco Holding SA, said today in a telephone interview.

About half the power contracts signed in Brazil may come through the free market as more large energy consumers like factories and supermalls opt to purchase electricity directly from generators rather than the grid, Severine said. About a quarter of contracts use such arrangements now, he said.

Free Market

Bioenergy, which has signed power contracts for six wind farms with 144 megawatts of capacity since 2009, registered to bid for deals to deliver electricity from 460 megawatts of projects in a government-organized auction set for Dec. 20, Marques said.

The company will also hold its own auction to sell power from 200 megawatts of wind farms on the free market at 115 reais ($61) a megawatt hour, 15 percent higher than the rate it expects to sign in the government-run event, he said.

Bioenergy will start producing electricity commercially at Brazil’s first wind farm to sell power on the free market within 15 days, Marques said. The 65 million-real project has nine turbines furnished by Fairfield, Connecticut-based General Electric Co. and will sell power to utility Cia. Energetica de Minas Gerais, he said.

The markets haven’t treated renewable energy developers well in recent years, Severine said. By mid-2012, “there will be more clarity for investors.”

Desenvix Energias Renovaveis SA, the renewable energy arm of Barueri, Brazil-based engineering company Engevix Engenharia SA, in December canceled plans for an initial public offering, Leoze Maia, manager of investor relations, said today in a telephone interview. “The discount the market was paying for our shares was higher than we expected,” he said.

Renova Energia SA, based in Sao Paulo, raised 172.5 million reais in an initial public offering on the Bovespa stock exchange in July 2010, about 20 percent of what it had initially planned.

--Editors: Will Wade, Tina Davis

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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