Brazilian renewables company CPFL Renováveis will increase its generation assets by 18.5% to 2.12GW after it assumes control of DESA, a smaller renewables player, both companies said in statements.
In exchange DESA will hold a 12.63% stake
in CPFL Renováveis through FIP Arrow, an equity fund through which the Weege
family also controls DESA. Under the agreement, FIP Arrow will have the right
to elect a member of the CPFL Renováveis' board.
CPFL Renováveis will also assume DESA's
R$200m ($83.5m) debt, the companies said. Conclusion of the agreement will occur
after auditing and authorisation from Brazil's electric regulator Aneel.
This is CPFL Renováveis' first acquisition
this year. The privately held Brazilian company has been buying smaller
renewables companies and assets for the past years as a declared growth
strategy, staying out of government auctions.
Last year, CPFL Renováveis raised R$1bn through
an IPO which it said would be used for mergers and acquisitions.
A person familiar with the negotiations
told Recharge that the Weege family's decision to sell aims to avoid taking on
more debt, or increase investments to develop its wind, solar and small
hydroelectric generation assets and portfolio.
DESA has a portfolio of 300.8MW of
projects planned, in construction and in operation. It also has a pipeline of
2.5GW in renewable energy projects.
CPFL Renováveis is controlled by CPFL
Energia, one of Brazil's largest privately held conventional power generation,
transmission and distribution companies.
Although CPFL Energia will reduce its
58.8% stake in CPFL Renováveis it will still have a controlling stake bigger
than 50%, the company said in the statement.