Brasília electric utility privatized after auction with 76.63% premium

Bahia Geração de Energia, of the Neoenergia group, represented by CityGroup, won the auction privatizing the Companhia Energética de Brasília S.A (CEB – Distribuição), Brasília’s electric utility, held Friday morning (Dec. 4) at the B3 stock exchange headquarters, in São Paulo. The winning bid stood at $486 million—a premium of 76.63 percent.

The minimum bid had been set at $275 million. The auction took around two hours to finish, and competition was fierce between Bahia Geração de Energia and CPFL Comercialização de Energia Cone Sul, represented by BTG Pactual.

CPFL ended the auction with a $484 million—a premium of 76.14 percent. The competitor placing the third highest bid was Equatorial Participações e Investimentos, represented by broker dealer XP, made a $287 million bid, a 4.29 percent premium.

The utility’s privatization process was designed by the country’s Economic and Social Development Bank (BNDES). Gustavo Montezano, president of the institution, stated that CEB was “draining” public funds that could be put towards other fields, like education, health care, and infrastructure. The concession is estimated to draw some $966 million in investment for the region, he noted.

CEB President Edison Garcia admitted the firm’s privatization was met with “great opposition,” but he argued he observed the technical principles and that the service offered is likely to be improved. “We’ve reached an unprecedented, historic period for privatization plans in Brazil with a privatization with the highest premium, the highest nominal value, and the longest time possible,” he said, adding that the whole process took 11 months to be completed.