Equatorial Completes Largest Renewable Energy Acquisition in Brazilian Market by Acquiring Echoenergia for BRL 6.7 Billion

Equatorial Energia Is Close to the Largest Renewable Energy Purchase Ever Made in the National Market. The Company Purchased Echoenergia, Which Was Already in Its Second Attempt to Sell, for R$ 6.7 Billion

Equatorial Energia is about to sign the purchase of Echoenergia, in the largest renewable energy purchase ever made in the national market. The company, which operates in transmission and distribution, will pay R$ 6.7 billion, without any share exchange. The purchase marks Equatorial’s impactful debut in generation, adding renewable assets that have caught the attention of investors. Echoenergia has one of the largest wind energy portfolios in the country.

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Echoenergia and Its Sale Attempts

Actis, the private equity manager, had previously attempted to sell Echoenergia in 2019, when it had closed an exclusivity agreement with the Canadian CDPQ; however, they could not reach a price agreement before the pandemic suspended ongoing negotiations. In June of this year, the manager reactivated the sale process of Echoenergia, coordinated by Credit Suisse.

Other companies, such as Eneva, evaluated the deal this time, until Equatorial secured exclusivity. The buyer was advised by XP Investimentos, which places the firm in the major league of investment banks in M&A.

It is worth noting that XP continued to pursue offerings in stocks and debts over the past few years, including major operations, but its entry into acquisition and merger transactions had been primarily in deals of medium and small scale.

The market estimate was already close to R$ 7 billion for the renewable energy company, but this would include debt; however, it would only represent the equity portion. The enterprise value reaches the mark of R$ 10 billion.

Renewable Energy Acquisitions Are Increasing in Brazil

With the high global demand from investors for sustainable practices, transactions in renewable energy have grown in Brazil. About 10 days ago, CPPIB from Canada and Votorantim Energia decided to combine their operations in the sector, valued at over R$ 8 billion; however, this was not an acquisition but rather a merger of the assets of both companies, which were already partners.

In the proposal, they also intend to include CESP, which could raise the value of the deal to around R$ 17 billion. The manager Actis has been updating its portfolio in Brazil and has undergone a sort of recent reorganization of its business.

The manager will continue its activities in Brazil focusing on renewable energy assets, while its investments in areas such as education and consumption will now be managed by Noon.

Meet Equatorial

Equatorial Energia is a holding company that operates in the energy sector for Brazilians, in distribution through the states of Maranhão, Pará, Piauí, Alagoas, and Ceará. Transmission, with 8 projects already completed and an operational line that crosses Goiás and Tocantins.

Moreover, the company also utilizes thermal energy generation through Distributed Generation and Geramar. The company was established in 1999 and since then has built a history full of milestones. The latest was the acquisition of E-Nova.