Do you want to use the FGTS to buy Eletrobras shares? View Q&A about the operation | Economy

The government decided to privatize Eletrobras, the main company in the Brazilian electricity sector. For this, it will issue new shares, which will be offered to investors. Workers who have resources in the Severance Indemnity Fund (FGTS) will also be able to use part of the balance to buy company shares.

See below questions and answers about privatization and the purchase of shares using the FGTS.

Investment in Eletrobras shares is for everyone and has very good prospects, says expert

How does the privatization of Eletrobras work?

The government chose to carry out the privatization by means of capitalization: the Union will offer new Eletrobras shares on the stock exchange and, with that, will cease to be its controlling shareholder. The government’s share in the company is expected to drop to 45% stake.

Where does the money from the privatization of Eletrobras go?

If it goes as planned, privatization should move R$ 67 billion over the next few years – of which R$ 25.3 billion will go straight to the government’s cash. Another 32 billion will be allocated to the Energy Development Account (CDE) to mitigate tariff readjustments and subsidize sectoral policies.

Who can buy Eletrobras shares?

The purchase of shares will be open to institutional investors and individuals. Workers can buy using the money from the Severance Indemnity Fund (FGTS), as happened with the shares of Petrobras and Vale.

Who can buy using the FGTS?

Workers from any sector who have funds in the Severance Indemnity Fund (FGTS) may use part of this balance to buy Eletrobras shares. The purchase will take place through the so-called “privatization mutual funds”, a device created in the 2000s that has already been used by the government in the sale of papers from other state-owned companies.

Is there a limit to buy using the FGTS?

Workers will be able to use up to 50% of the balance of each escrow account to purchase the shares.

However, at the limit of 50%, all investments that the worker has in this type of investment are taken into account. In other words, if the investor has part of his FGTS still invested in Petrobras and Vale shares, this amount must be deducted to find out how much can now be allocated to Eletrobras shares.

The minimum amount for the application is R$ 200 per worker.

What is the share price?

The value of each share will be defined on June 9 and depends on demand, that is, how many investors are interested and how much each one intends to invest.

Will I be able to invest to the limit?

It is possible not. If demand is greater than the number of shares available, an apportionment will be made.

Will it be possible to redeem at any time?

Once invested, you will have to wait at least 12 months to ask for the shares to be redeemed. The money will then go back to the worker’s FGTS account, which can only be withdrawn under the conditions provided for by law, such as unfair dismissal, retirement and property acquisition, among others.

Will I be able to withdraw if I am fired?

Yup. In this case, it will be possible to redeem the application before the period of 12 months – provided that the worker opts for withdrawal-withdrawal.

What happens if I need the money to buy a property?

The worker will be able to request the redemption, in whole or in part, to use in the purchase of his own housing ready or under construction, in the payment of part of the installments and in the amortization or extraordinary settlement of the debt balance of financing from the Housing Financial System (SFH). In that case, you don’t have to wait the 12 months either.

What is the term to invest with the FGTS?

Reservations can be made until this Wednesday (8) .

Is this type of investment new?

the use of FGTS in privatizations has already occurred on three occasions: Petrobras, in 2000; Rio Doce Valley, 2002; and Petrobras again, in 2010. Mutual funds are managed by financial institutions. In the process of privatization of Eletrobras, a ceiling of R$ 6 billion was established for the global use of FGTS resources in the purchase of shares in the public offering. If applications exceed this ceiling, an apportionment will be made.

How can I simulate the amount I can invest?

Since the 27th, when the Eletrobras stock offering was launched, every worker residing and domiciled in Brazil who has an account linked to the FGTS, active or inactive, can now simulate the balance available for investment through the FGTS application.

The application can be downloaded from the following links:

  • android cell phones (click here to download)
  • iOS Cell Phones – Apple (click here to download)

How to make the application reservation?

To reserve an application in the Mutual Privatization Fund, you must access the FGTS or Caixa app to release the authorization.

See how to do it through the Caixa app:

  • In the application, you need to authorize the sharing of data from your FGTS accounts. Thus, the institution will identify the maximum amount of investment you can make.
  • On the main screen, you need to click on the “FGTS” option.
  • Then click on the “Authorize FGTS financial agent” option.
  • Finally, choose the option “Privatization Mutual Funds” and click on consult.
  • On the page that will open, you need to select Caixa Econômica Federal as a financial institution and click on continue.
  • Then you will read and accept the terms and click continue again.
  • After that, just enter your electronic signature and you’re ready to book.

Now, see the steps through the FGTS app:

  • In this app, you need to click on the “More” menu. And then in the option “application simulator in the FMP-FGTS”.
  • Then, you need to authorize the FMP-Eletrobras fund to consult your FGTS accounts and reserve the amounts for investment.
  • Afterwards, you will read and accept the terms.
  • On the next page, it’s time to select an administrator. Participation in privatization mutual funds may occur individually or through the Investment Club (CI-FGTS) managed by an institution authorized by the Securities and Exchange Commission (CVM).

Now that the release has been made, it is necessary to make the purchase reservation. See how:

  • In the Caixa app, choose the “investments” option.
  • On the next screen, click on “FMP Reservation”.
  • Then select the option “FGTS Resources”.
  • On the next screen, all available FGTS accounts and the maximum resource that can be applied to each of them will appear. Click continue.
  • Then you need to enable the account (or accounts) you want to use for this application and click continue.
  • Then just enter the amount you want to invest and click “Next”.
  • You will then read and agree to the membership terms and click “Continue”.
  • After that, just insert your electronic signature and the reservation will be made.

Caixa also informed that “only after 12 months have elapsed from the date of application can there be retraction with a consequent return on investment to the FGTS”. For this to occur, the request will be made by the holder of the account linked to the administrator of the FMP-FGTS or CI-FGTS.

What will the yields be?

Privatization funds can be an alternative for workers looking to improve the performance of their resources. However, there is no guarantee that this will happen.. By law, the FGTS has a yield of 3% per year.

In recent years, however, workers have also received part of the Guarantee Fund’s profits, which result from interest charged on loans for infrastructure, sanitation and home ownership projects. The distribution improved the return on funds deposited in the fund.

In 2020, with the distribution to workers of the FGTS profit, the income was 4.52%. In 2019, considering the additional profit distribution, the yield was 4.90%. In 2018, it reached 6.18%.

According to an analysis by XP, it paid off to have invested in portfolio diversification with FGTS funds in previous operations (Petrobras and Vale do Rio Doce).

“Investors who left their funds invested only in the FGTS had a return of 136.09% [2002 a 2022]. For the investor who invested in a simulated FMP of Vale da Rio Doce, one of the options that was offered on the market, there was a return of 2,235.13%. For the investor who put resources in the simulated Petrobras fund, another option offered to the market, it had a return of 649.36% in the same period”, informed the brokerage.

What are the characteristics of electrical roles?

Currently, there are more than 30 companies in the energy sector listed on B3. The companies operate in the generation, transmission and distribution sectors, being able to act in more than one. Eletrobras, for example, operates in both generation and transmission.

Electric utilities are considered less risky because they involve companies with long concession contracts and because it is an essential service. As they have more predictable revenues, margins and profits, they are considered a safe haven in times of crisis and good dividend payers.

The country continues to demand robust investments in the sector. In Brazil, the national system is still very dependent on the generation of energy from hydroelectric plants, but there has been an advance in wind and solar energy, amid the need to expand the more sustainable production model.

How much is Eletrobras worth?

The current market value of Eletrobras is R$ 65.7 billion, considering the closing price of the shares on June 3rd. The value represents a jump of 25.7% compared to the end of 2021. The historical maximum was recorded in June 2021, when the company was valued at R$74.5 billion on the stock exchange, according to data from the financial information provider economics.

Was this recent appreciation speculation?

Not necessarily. Eletrobras’ shares appreciated considerably in 2022. From the beginning of the year until the market closing last Friday (3), the company’s shares were up 28.2% in ELET3 and 31.7% in ELET6.

But other companies in the electricity sector are also doing well on the stock market this year. This happens because it is common for investors to look for assets of these companies in times of more turbulent market. This is what is called in the jargon of “defensive companies”.

This attention was given because the contracts of energy companies are, in general, long-term and adjusted for inflation. Thus, there is a more constant profitability even in difficult times of the economy.

In fact, Eletrobras rises more than the others with the prospect of privatization. Today, the energy produced by the state-owned plants is sold to consumers at prices lower than those practiced by the market. With the privatization and removal of the plants from this regime, Eletrobras will be able to increase its revenue from the sale of energy at the (higher) market price.

“It is difficult to quantify how much of this recent appreciation has an effect on privatization prospects alone. But, yes, the market ‘priced’ a more positive scenario, considering that the chances of changes happening are very high”, says João Daronco, analyst at Suno Research.

Does this mean that stocks shouldn’t appreciate too much in the short term?

For João Daronco, an analyst at Suno Research, the recent appreciation of Eletrobras reduces the “safety margin” of the investment. In other words: when you buy a stock that has recently appreciated, it tends to have a lower “ceiling” to increase in volume that is interesting for the shareholder.

But there are two considerations: the FGTS yield is quite low, which makes it possible to have a more profitable investment in Eletrobras shares. Another is that investments in variable income are more advisable for those who intend to carry this investment for a longer term.

“The short term is much more driven by rumors and news than fundamentals and operational data. The investor looking at Eletrobras — and at any company listed on the stock exchange — has to pay much more attention to the long term”, says Daronco.