Eletrobras (ELET3) is privatized with an offer of BRL 33.7 billion on the Stock Exchange

The share offering that resulted in the privatization of Eletrobras (ELET3;ELET6) moved around R$33.7 billion, after the price of each share was set at R$42 on Thursday night, the 9th, according to sources. Marketplace.

Target of intense dispute between local and foreign investors, the price adjustment ended after 20h. The sale of the state-owned energy company via the stock exchange was the largest privatization movement in the country in two decades. The government’s and BNDES’s share in the business should fall to around 35%.

The price of BRL 42 represented a 4% discount in relation to the share price at the end of Thursday’s trading session, of BRL 44. In addition to being one of the largest stock offerings worldwide in 2022 , the Eletrobras operation was also the largest operation on B3, the Brazilian stock exchange, since the megacapitalization of Petrobras in 2012, which moved BRL 100 billion.

Major investors were present in the operation, including the 3G Capital fund – of the founders of Ambev – and the Clássico bank, owned by José Abdalla Filho, who is also a relevant shareholder in Petrobras. The total demand, considering all types of investors, would have exceeded R$ 70 billion.

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But Eletrobras’ offer had an important boost from the possibility of using resources from the Severance Indemnity Fund (FGTS) for the purchase of shares. It was the first time in about 20 years that Brazilian workers had this opportunity. Before, this happened with papers from Vale and Petrobras.

Faced with the opportunity, demand was high: about 350,000 people reserved shares in the company. The ceiling for using the FGTS was R$6 billion, but demand was R$9 billion, or 50% more. For this reason, there should be a reduction in relation to the values ​​reserved by workers.

The investor who used his FGTS to enter the offer will not be able to dispose of the investment for a period of at least 12 months – except in some cases, such as dismissal without just cause.

With an eye on efficiency gains

Regarding the privatization of the company, one of the first steps expected by market sources heard by Estadão is the change of company executives and also of the board of directors. With the reduction of its participation, the government will have fewer seats in the collegiate, opening space for investment funds to nominate their representatives.

From this change, the new board will have to make a general change in the company’s management structure, including the entire top echelon.

Industry analysts believe that the company may have more breath to invest, including in renewable energy sources. “Eletrobras will have exactly the same governance model that has already been tested in other privatizations in the electricity sector in Europe.

The availability of cash and the use of the capital market for new funding will allow new investment plans that are essential in the segment”, points out Fabio Coelho, president of Amec, an association that represents more than 60 investors, both local and foreign, who have investment of more than R$ 700 billion in the Brazilian stock exchange.

According to Coelho, one of the relevant points in the “new Eletrobras” will be greater agility in decision-making. “It is important to emphasize that the government will continue to be the largest individual shareholder, and that, therefore, it will have access to a higher percentage of expected profits, thus justifying the public interest in the operation”, he comments.

Closer to the private sector

Partner at M3BS Advogados and specialist in public affairs, Lucas Miglioli says that, with privatization, Eletrobras should become more efficient. “By making its bureaucracy more compatible with that of the private sector, it will have more agility to face an increasingly competitive scenario and avid for new technologies”, he said. “The expectation is that, when it ceases to be controlled by the Federal Government, Eletrobras will cease to act as a mere operator and gain a leading role in the sector.”

For the general public, one of the expectations is that the electricity bill will be cheaper, but that may not be the case. Partner at PMMF Advogados and specialist in public law, Ulisses Penachio recalls that only part of the new capital – that destined for the Energy Development Account (CDE) – will be able to generate some reduction in tariffs. “In the medium and long term, the impact of privatization on tariffs tends to be neutral”, he points out.

What changes with Eletrobras being privatized?

With the Union no longer controlling Eletrobras, the expectation is that changes will occur in the company related to operational, cost and portfolio management, capital allocation, governance, fiscal and tax contingencies, in addition to improved profitability.

The challenge will be to transform it into an efficient company with investment capacity for organic and inorganic growth.

The company is also expected to become an important player in the energy transition.

Greater financial strength to invest in renewable generation sources and new technologies, cutting costs and expenses and reducing the more than BRL 80 billion in contingencies are among the gains from privatization seen by analysts, who consider that the “turn of the key” will not should take place in the short term, but it is part of a process that can take years to complete.

(With InfoMoney Writing)

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