GIC in talks to form Brazil clean energy venture, sources say

SAO PAULO • Votorantim's energy unit is in talks with global pension and sovereign wealth funds, including GIC, to create an integrated wind, solar and small-scale hydropower electricity joint venture in Brazil, two people with direct knowledge of the plans said.

The unit known as Votorantim Energia has contacted Canada Pension Plan Investment Board over the creation of an integrated clean energy platform, the sources said.

Votorantim Energia has also discussed the plan with GIC and several unnamed North American pension funds, one of the people said.

According to the same person, the venture would focus on developing new and existing projects, adding that acquisitions or government licensing bids do not seem to be a priority. Neither source would reveal the size or the estimated value of the venture, noting that a deal is not imminent at this point.

Such a venture would harness growing foreign interest in Brazil's renewable and clean energy, as the government phases out subsidised funding for fuel-and coal-powered plants.

A media relations firm working for Sao Paulo-based Votorantim declined to comment, as did the Toronto-based Canadian board. GIC's Singapore-based media office did not immediately respond to an e-mailed request for comment.

The Votorantim conglomerate, Brazil's No. 1 diversified industrial group, has doubled down on energy to diversify from core metals, cement, pulp and steelmaking. Clean energy projects often provide stable revenue and cashflow streams - generally a goal pursued by pension and sovereign wealth firms alike.

"Certainly, a long-lasting opportunity for a venture like this seems to emerge with the ongoing policy shift," said one of the people, who asked for anonymity to discuss the issue freely.

Currently, Votorantim Energia has about 2.5 gigawatts in generation capacity from dams and other plants. The company's 1.2 billion-real (S$515.4 million) Ventos de Piauí wind farm project should start operating early next year with a capacity of 206 megawatts.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 11, 2017, with the headline 'GIC in talks to form Brazil clean energy venture, sources say'. Print Edition | Subscribe