Top Renova Shareholders to Sell Part of Stakes

SÃO PAULO--Three of Renova Energia SA's biggest shareholders plan to sell about 1.15 billion Brazilian reais ($479 million) worth of their shares in the Brazilian renewable-energy company in what would mark the first public offering in Brazil this year.

Infra Brasil, Caixa Ambiental and Banco Santander Brasil SA currently own 15.11%, 7.09% and 2.94%, respectively, in the company, according to the preliminary prospectus for the operation.

Renova didn't unveil a timetable for the sale, which must still be approved by financial-market regulators, nor did it say how many shares would be sold by each shareholder.

Renova operates in the generation of electricity from renewable sources, focused on wind farms, small hydroelectric plants and solar energy. It is the largest renewable-energy company in Brazil by installed capacity, with a capacity of 1.953 megawatts.

Renova posted a net profit of 10.72 million reais in the fourth quarter, compared with a loss of 18.3 million reais in the fourth quarter of 2012.

The company's free float accounts for 30.42% of total capital. Renova is controlled by local electric companies Cemig and Light SA. Neither company will sell Renova shares under the offer.

Bank of AmericaMerrill Lynch, Banco Santander, BTG Pactual, Itau BBA and J.P. Morgan will coordinate the operation.

The offer plan comes amid challenging times for emerging-markets assets. Earlier this month, Fras-Le SA, a Brazilian firm that makes brake parts for vehicles, suspended its share-offer plans, citing adverse market conditions.

According to analysts, Brazilian companies have been struck by a double-whammy in global capital markets: the reduction of monetary stimulus by the U.S. Federal Reserve, which has led investors to pull money out of emerging markets; and concerns about the state of the economy in China, which is Brazil's largest trade partner.

Concerns also have been mounting on the domestic front. Analysts point to the budget deficit, which widened last year to 3.28% of gross domestic product from 2.48% of GDP in 2012. The country is entering what is widely expected to be a fourth consecutive year of weak economic performance.

So far this year, Brazil's main stock index, the Ibovespa, is down nearly 10%.

After two years of relatively lackluster performance, share-offer activity totaled 23.89 billion reais last year, up from 14.3 billion reais in 2012, according to the Association of Financial and Capital Market Institutions, or Anbima. That volume, however, was distorted by the enormous offering by Brazilian pension-and-insurance company BB Seguridade Participacoes SA, which raised 11.5 billion reais and was the world's largest initial public offering in 2013.

Since then, the equity market in Brazil has seen mixed results, with some companies pulling IPO plans because of a weak market, including airline Azul Linhas Aereas and cement producer Votorantim Cimentos SA. Other small companies have gone ahead with their plans but sold shares at lower prices.

Write to Rogerio Jelmayer at [e-mail]

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