Votorantim, CPP Investments to merge Brazilian assets into 3.3-GW renewables platform

Brazil’s Votorantim SA and Canada Pension Plan Investment Board (CPP Investments) on Monday announced plans to consolidate Brazilian energy assets to create a renewable energy platform with 3.3 GW of installed capacity.

The new company will be publicly traded and will have net revenues of BRL 5.8 billion (USD 1.1bn/EUR 911m), based on the 12 months through June 30, 2021.

As a first step, VTRM, an existing joint venture of Votorantim Energia and CPP Investments, will acquire both companies' equity holdings in various renewable energy assets, including electricity producer Companhia Energetica de Sao Paulo (CESP). As part of this deal, CPP Investments will pour BRL 1.5 billion to boost VTRM's capital base.

The next step is a proposed merger of CESP's shares into VTRM. Following completion of these deals, the new combined entity will be listed in the Novo Mercado segment of the B3 Stock Exchange as CESP's sole controlling shareholder. All current CESP shareholders will become shareholders of the new company.

The newly created company will have 2.3 GW of installed hydro power capacity and 1 GW of wind capacity in operation or advanced stage of construction, as well as a 1.9-GW development pipeline of solar, hybrid and hydro projects. According to the announcement, it will also be a large energy trader, having sold an average of 2.6 GW during 2020.

"This transaction will create a diversified and well-capitalized platform primed for further growth in the country's power sector," said Bruce Hogg of CPP Investments.

Votorantim and CPP Investments will expand their partnership with the creation of a separate, privately held company that will invest in new decarbonisation solutions and technologies, as well as wind and solar projects at earlier stages of development.

(BRL 1 = USD 0.182/EUR 0.157)

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