From Friday (3) until next Wednesday (8), around 40 million workers will be able to invest in the purchase of shares in Eletrobras, which is in the process of privatization, using the FGTS (Service Time Guarantee Fund). The reserve of the balance that will be applied must be made through a broker or a bank chosen and authorized by the worker.
O minimum amount for application is R$ 200.00, and it is possible to use up to 50% of the available balance in the FGTS account. The purchase will be through the FMP-FGTS (Mutual Privatization Funds), as has been done previously in the sales of Petrobras and Vale shares.
The investment will have minimum term of 12 months. That is, whoever opts for the acquisition must hold the shares for at least 12 months. Afterwards, the value of the negotiation returns to the FGTS balance. The orientation is to make the investment with a view to the long term.
In addition, the FGTS money that is invested in Eletrobras shares can only be withdrawn under the conditions permitted by law (dismissal for just cause, purchase of a home, retirement, serious illness).
What are the advantages?
According to analysts, it is an opportunity to reallocate the FGTS money, which yields very little, and put it in a long-term variable income investment. The FGTS balance yields TR plus 3% per year, well below inflation, which has accumulated at 12.13% in the last 12 months, and several other investment products. If the person is not going to use the value of the FGTS to buy a property, for example, the option of investing in shares is interesting.
Since August 2000, one of Petrobras’ main privatization mutual funds has gained 1,343%. In the same period, the FGTS accumulated an increase of 152.7%. The valuation of one of Vale’s main mutual funds since March 2002 was even higher: 2,666%. In the same period, the FGTS yielded 133.4%.
what are the risks
Unlike the FGTS, in which the worker already knows how much income he will have per year, this certainty will not exist in the purchase of Eletrobras shares. Profitability depends on the appreciation of the securities in the market. But the profitability of these mutual funds was not always a good deal. In January 2016, for example, the shares of the two companies fell sharply. “Variable income is a long-term investment. Midway swings are common. For investors who do not want to take risks or think about using the FGTS in the short term, it might be good to rethink the idea of investing in shares”, says Liao Yu Chieh, financial educator at C6 Bank.
What is the minimum investment time?
The investment has a minimum period of 12 months, that is, whoever buys Eletrobras shares with the FGTS will have to wait a year to sell them. Even after this period, the money cannot be transferred to the worker’s current account. The balance will return to the FGTS account, subject to traditional rules, such as withdrawal in the event of dismissal and use in real estate financing – or in extraordinary withdrawals allowed by the federal government.
What is the price of each share in the offer?
The price of each share in the offer will only be defined on June 9th. Today, the state-owned company’s share is around R$42 on the Brazilian stock exchange, but that does not mean that it will be sold at that value. The price is defined after negotiations between the company, banks and institutional investors, which are investment funds. This means that the individual is left out of this price discussion process.
What is the reserve period for Eletrobras shares?
The reserve period for the purchase of Eletrobras shares with the FGTS runs from June 3 to 8.
How to check the balance?
The consultation of the fund balance available for application in the offer is already released in the FGTS application. Through the FGTS application, every worker who has an account linked to the FGTS, active or inactive, can simulate the balance available for investment in the company’s FMPs (Mutual Privatization Funds).
How to authorize the application?
The application of resources must be made by the worker in a brokerage or bank, among those qualified to operate with the FMP-FGTS. But first, the interested party must access the FGTS application and authorize the institution to consult the available balance of its linked account and to reserve the amounts.
In addition to the FGTS application, at Caixa branches, the person may consult the balance available for investment in FMP, simulate the application and authorize an institution managing the FMP-FGTS to reserve the amounts for investment in FMP.
What to do after authorization?
After authorization, the worker must contact the FMP-FGTS administrator (bank or broker) chosen to inform the amounts he wants to apply.
What are the qualified institutions?
It is possible to choose one of the administrators that have been qualified to operate with the FGTS in this offer: Caixa, Banco do Brasil, Bradesco, BTG Pactual, Daycoval, Genial Investimento, Itaú, Safra, Santander and XP Investimento.
From the choice of the FMP-FGTS administrator, all the worker’s relationship to effect the application will take place with the selected institution, which becomes responsible for the application of the values of their FGTS accounts.
Who does not have money in the FGTS account can participate?
Yes, individuals who do not have funds in the guarantee fund will also be able to buy shares.
What happens if the offer doesn’t work?
In accordance with the Offer Prospectus, the amounts deposited will be returned without any remuneration, interest or monetary correction, without reimbursement of any costs and with deduction, if applicable, of the amounts related to taxes.
Have there ever been stock offerings in which the use of the FGTS was released?
Yup. In the past, individuals were able to use the money to buy shares in Vale and Petrobras.
Why is this offer being made?
The share offering is part of the privatization process of Eletrobras, which is currently a state-owned company. After the offer is made, the Union’s share in the electricity sector company will fall below 50%, which means that the federal government will no longer control the company.
Learn how to buy Eletrobras shares with the fund’s resources