If I invest the FGTS in Eletrobras, when can I redeem it? Got dividends? GO? 7 questions about the offer

The reserve period for Eletrobras shares is about to begin – and now, questions are multiplying among workers interested in using part of the FGTS (Fundo de Garantia do Tempo de Serviço) to invest in the company during its privatization process.

The possibility of purchasing Eletrobras shares with part of the FGTS is provided for in the prospectus of the share offering that will be carried out to reduce the Union’s share of the company’s capital. The deadline to apply for the investment runs from Friday (3) to June 8, next Wednesday.

According to the document, the minimum investment to enter the offer using the FGTS will be R$ 200 and the maximum, equivalent to 50% of the available balance in each linked fund account.

The purchase of shares will be carried out indirectly: the FGTS resources will be invested in privatization mutual funds (or FMPs) which, in turn, will acquire the Eletrobras shares. It is a system similar to the one adopted in the 2000s, when workers were able to invest in the shares of Vale (VALE3) and Petrobras (PETR4) using the FGTS.

In the case of Eletrobras, if the investment in the FMPs exceeds the maximum amount of R$ 6 billion, a proportional apportionment will be carried out between the reservation requests. In this case, the amounts deposited in excess will be returned without remuneration, interest or monetary correction, and with the deduction of any taxes.

O InfoMoney talked to experts and consulted documents to seek answers to some common questions related to the operation. Check out:

When will it be allowed to sell Eletrobras shares purchased with FGTS funds?

The worker who uses part of the FGTS to invest in Eletrobras through privatization mutual funds will need to wait a period of 12 months. Only after this grace period will it be possible to make redemptions. The funds will return to the FGTS account on D+5 – that is, five days after the withdrawal request.

If you want to transfer the amounts invested in Eletrobras to other FMPs – such as those invested in Vale or Petrobras – the grace period is shorter: redemptions can be requested from six months onwards.

Will there be Income Tax on gains obtained with Eletrobras shares purchased with FGTS funds?

Income tax may or may not be charged.

If they are less than or equal to the income limit of the FGTS account in the same period, the gains obtained by the privatization mutual funds will be exempt. But if they exceed that limit, IR will be levied.

Therefore, tax will only be charged on earnings that exceed the FGTS remuneration between the date of application and the date of redemption – and the rate will be 15%.

Traditionally, the FGTS remunerates workers’ resources at a rate of 3% per year, plus the variation of the Referential Rate (TR). Since 2016, the fund has also distributed to workers a part of the profit it earns from the application of its resources. Last year, for example, it paid BRL 8.1 billion of the profit it made in 2020.

As the profit distribution represents an additional gain, the total FGTS return for 2020 totaled 4.92%.

Will Eletrobras shares purchased with FGTS funds be entitled to dividends?

Yes, but they will not be deposited directly into the workers’ FGTS accounts – rather, they will be received by the privatization mutual funds through which the investment in the company was made.

This is because, in practice, the worker will not buy the shares themselves – but quotas of funds that will invest in Eletrobrás. The FMPs will be the de facto investors in the company’s shares, and therefore will be entitled to dividends.

In any case, investors will benefit from the proceeds that will be distributed by Eletrobras, as they will make up a part of the total gains obtained by the FMPs.

Like the dividends distributed by any company, those of Eletrobras are also exempt from Income Tax.

Is it possible to invest in more than one Eletrobras privatization mutual fund?

Not. According to information available on the Eletrobras website, it will not be possible to invest in more than one privatization mutual fund or in more than one managing institution during the offer.

How much does it cost to invest in Eletrobras using the FGTS?

Privatization mutual funds are managed by financial institutions that charge an administration fee for their services.

A survey carried out by InfoMoney shows that at least 22 FMPs were created by banks and brokers to invest FGTS resources in Eletrobras. Administration fees range from zero to 0.80% per annum.

It is important to be aware, as many institutions have lowered costs in recent days. Until Monday (30), the lowest rate available was 0.20% per year and the highest, 1.50% per year.

In this InfoMoney report, you can check the complete list of funds and the respective rates updated daily.

What are “migration” funds?

Some of the funds created to receive FGTS resources contain the inscription “migration” in the name. They will be used by those who want to redeem the investments made in the past in the FMPs of Vale and Petrobras to apply, now, in Eletrobras. It is an option to exchange an old investment for a new one.

In general, financial institutions are replicating, in these funds, the same conditions – administration fee, for example – as those created specifically for the Eletrobras offer.

With a detail: investors who choose to transfer the amounts they have from other FMPs will have a shorter period to join the offer. Reservation requests also start on Friday (3), but end on Monday (6).

At what value will Eletrobras shares be purchased by the privatization mutual funds?

The common shares (ELET3) will be acquired at the price to be announced next Thursday (9), the pricing date provided for in the Eletrobras offer schedule. This Wednesday (1), the shares closed quoted at R$ 43 on the stock exchange.

Turn your FGTS into an investment: use up to 50% of your FGTS to invest in Eletrobras, the largest energy company in Latin America.
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