US-based AES Corp Expands Footprint in Brazilian Renewable Sector

The AES Corporation has agreed to acquire an 18.5% interest in AES Tietê and will own 42.85 percent of the shares in the Brazilian renewable company

US-based energy company The AES Corporation has announced that its wholly-owned subsidiary, AES Brasil has agreed to acquire an 18.5 percent economic interest in AES Tietê from BNDES Participações. Under the terms of the acquisition, AES Brasil will purchase for a total consideration of USD 246 million. Once this transaction closes, AES will own 42.85 percent of the shares of the Brazilian renewable energy firm.

AES Tietê has 3.7 GW of renewable generation in operation or under construction, consisting of 2.7 GW of hydro, 708 MW of wind and 310 MW of solar.

The transaction will strengthen the American firms’ renewable portfolio in the South American country and reinforce the substantial progress the Company is making toward achieving its aggressive decarbonisation targets.

Following closing, AES will propose the migration of AES Tietê to the Novo Mercado, the listing class with the highest governance level on the Brazilian stock market, in order to gain greater liquidity and value for the shares.

“By increasing our ownership in AES Tietê’s 3.7 GW platform of renewables, we are reinforcing our commitment to reduce our total generation from coal to less than 30 percent,” said Andrés Gluski, AES President and Chief Executive Officer. “Following this transaction, we plan to move AES Tietê’s listing to the Novo Mercado, the highest corporate governance segment of companies listed on the Brazilian stock exchange, which is expected to further unlock the value of AES Tietê for the benefit of all shareholders.”

As a part of this transaction, AES Brazil will buy 73.8 million units (five shares per unit) of AES Tietê at BRL $17.15 per unit, for total of BRL $1.27 billion. This transaction is subject to completion of final documentation and is expected to close in the third quarter of 2020.

With the acquisition of a bigger share in the firm, AES Tiete will now focus on possible wind energy acquisitions and seek out long-term contracts to develop renewable energy plants that provide power directly to clients.