TotalEnergies Eyes AES Brazil's $1.1B Renewable Portfolio

Key Takeaway

• TotalEnergies SE, China Three Gorges Corp., and Auren Energia SA are potential buyers for AES Brasil's assets valued at 7 billion reais ($1.1 billion).
• AES Brasil's renewable energy portfolio, with a 5.2 gigawatt capacity, includes hydroelectric, wind, and solar power.
• The sale process is supported by Banco Itau BBA SA and Goldman Sachs Group Inc., underscoring the deal's significance in the energy sector.

Contenders for AES Brasil

TotalEnergies SE, China Three Gorges Corp., and Sao Paulo-based Auren Energia SA have been identified as potential buyers for the assets of AES Corp. in Brazil. The competition highlights the growing interest in Brazil's renewable energy sector, with AES Brasil Energia SA's market value currently standing at 5.6 billion reais ($1.1 billion). However, the holding company is seeking approximately 7 billion reais for its assets. Following the news, AES's US stock experienced a notable increase, jumping as much as 4.4% in New York, while AES Brasil saw a 1.4% rise in its shares.

Renewable Assets in Focus

The assets up for grabs boast a total installed capacity of 5.2 gigawatts, showcasing a significant presence in Brazil's renewable energy landscape. AES Brasil's portfolio is diverse, primarily focusing on hydroelectric power but also expanding into wind and solar energy sectors. This move aligns with a broader industry trend towards diversification and sustainability in energy generation.

Strategic Moves and Partnerships

In a strategic expansion into Brazil's renewable energy market, TotalEnergies announced a joint venture with Casa dos Ventos in October 2022, aimed at building and operating the latter's renewable portfolio. Similarly, China Three Gorges, through its Brazilian unit, has shown a keen interest in strengthening its foothold in the region. These developments underscore the strategic importance of Brazil's renewable energy sector to global energy companies.

Sale Process and Financial Strategies

AES is collaborating with Banco Itau BBA SA and Goldman Sachs Group Inc. to facilitate the sale of its Brazilian assets. This decision is part of the company's broader strategy to finance growth and enhance its capital structure. The involvement of prominent financial institutions highlights the significance of this transaction within the energy and financial sectors. Despite the high stakes, all parties involved, including Total, Auren Energia, CTG Brasil, Goldman Sachs, and Itau, have opted not to comment on the ongoing negotiations.