State Grid Corp. of China’s Brazilian unit is seeking to raise about $1 billion by selling a minority stake, people familiar with the matter said, in a move aimed at cutting debt and boosting growth.
State Grid Brazil Holding SA is looking to sell a stake of around 25% and has been holding talks with several Chinese state-backed funds, the people said, asking not to be identified because the matter is private. It has approached potential investors including CNIC Corp., China-Portuguese Speaking Countries Cooperation & Development Fund, known as CPDFund, and CLAI Fund, the people said.
The closely-held Brazilian grid company operates more than 16,000 kilometers (9,942 miles) of power transmission lines in the Latin American country. As well as reducing debt, it plans to use the proceeds for acquisitions, the people said.
Discussions are ongoing and the firms could still decide against pursuing a deal, according to the people. Representatives for State Grid and its Brazil unit didn’t immediately respond to requests for comment. Spokespeople for CNIC, CPDFund and CLAI Fund also didn’t reply or couldn’t be reached.
Other Chinese state-owned firms have also sought to bring in fresh capital via minority stake sales in their overseas assets, allowing them to deleverage while raising cash to expand through acquisitions. In 2021, a group of investors including CNIC and GIC Pte invested in China Three Gorges Corp.’s overseas portfolio, people familiar with the matter said at the time.
State Grid China started investing in Brazil in 2010, in its first major foray outside of Asia. State Grid Brazil’s network transmits the equivalent of 10% of the country’s entire high voltage network, according to its website and it has invested more than 28 billion reais ($5.7 billion) since 2010. State Grid Brazil runs 54 substations across 13 states.
CNIC, with an initial capital of about $11 billion, invests in areas such as oil and gas, metals and mining, power infrastructure and clean energy, its website shows.
The CPDFund was founded by China Development Bank and the Macau Industrial and Commercial Development Fund in 2013, to promote cooperation between China and Portuguese-speaking countries. It has invested in areas such as agriculture, manufacturing and infrastructure in countries such as Brazil, Mozambique, Angola and Macau. CLAI Fund, also backed by China Development Bank, targets investments in Latin America and the Caribbean region in sectors including clean energy, infrastructure and mining.
--With assistance from Kathy Chen and Emma Dong.
(Adds more about State Grid Brazil in sixth paragraph.)
Author: Cristiane Lucchesi, Vinicy Chan and Manuel Baigorri