Bloomberg News

CPFL Buys Wind Farms Amid Plans to Boost Renewable Capacity

February 27, 2012

CPFL Energias Renovaveis SA (CPFE3), the renewable-energy venture of CPFL Energia SA and ERSA-Energias Renovaveis SA (ERSA3), will buy four wind farms in Brazil as it seeks to more than double its renewable energy generation.

CPFL Energias Renovaveis agreed to pay 600 million reais ($352 million) for all shares in BVP SA, an energy company that’s indirectly controlled by a private equity fund managed by Banco BTG Pactual SA, the Sao Paulo-based company said in a Feb. 24 statement. It will also assume 462 million reais in debt.

The four wind farms have a generating capacity of 157.5 megawatts, raising CPFL Energias Renovaveis’s total capacity from hydroelectric, biomass and wind parks to 809.5 megawatts.

CPFL Energias Renovaveis may purchase additional wind farms to meet its development goal of 2,000 megawatts by 2015 as developers are squeezed by low prices in Brazil’s regulated electricity market, Chief Executive Officer Miguel Saad said today in a telephone interview.

“We’ll consider another acquisition if it brings value to us,” Saad said. “Wind energy will make up the largest number of future projects.”

The acquisition will make CPFL Renovaveis Brazil’s top wind energy producer, surpassing Industrias Metalurgicas Pescarmona SA, Helena Chung, an analyst at Bloomberg New Energy Finance’s Sao Paulo office, said today in an e-mail.

‘Aggressive Valuation’

The wind farms were bought for about twice what projects would cost if they sold electricity at current rates, Saad said.

“It is still a very aggressive valuation that I’m not sure is very sound,” Eduardo Tabbush, an analyst at New Energy Finance’s London office, said today in an e-mail.

The BVP projects, which went into operation between November 2008 and March 2010, sold electricity at an average price of 284 reais, CPFL Energias Renovaveis said.

Prices of electricity from wind farms fell by a third to 100 reais a megawatt hour in two government-organized auctions for new power capacity in August from two years earlier, national energy agency Empresa de Pesquisa Energetica said on its website.

CPFL Energia, Brazil’s largest non-government power distributor, holds 63.6 percent in the renewable-energy unit while Ersa controls the remainder.

Public Offering

The company may sell shares on Brazil’s stock exchange Bovespa this year to help raise funds for further developments, he said. About 900 megawatts of projects are under construction and will be built in the next two years, he said.

The agreement is CPFL’s second acquisition in less than three months. In December, the company concluded the purchase of Jantus SL, owner of four wind farms in Brazil, for 823.3 million reais, assuming another 675.4 million reais in debt.

CPFL rose less than 1 percent percent to 27.49 reais at the close in Sao Paulo. The stock gained 5 percent this year, compared with a 15 percent increase for Brazil’s Bovespa Index.

The purchase of BVP must be approved by Brazil’s energy and antitrust regulators. Banco Itau BBA SA was a financial adviser to CPFL and Goldman Sachs Group Inc. advised BVP.

To contact the reporters on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net; 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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