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Exclusive-Chinese, Brazilian, UAE suitors eye Castlelake renewable unit Ibitu, sources say

By Reuters

By Tatiana Bautzer and Leticia Fucuchima

SAOPAULO – United Arab Emirates investor Mubadala Investment Co, China’s State Power Investment Corporation and Brazilian companies Vibra and XP Inc are among those interested in acquiring assets owned by Brazilian renewable energy co Ibitu Energia, according to six sources with knowledge of the matter.

U.S. asset manager Castlelake has decided to divide Ibitu into two units for sale to broaden the field of potential bidders, the sources added, asking for anonymity to discuss private talks.

The investment banking units of Banco BTG Pactual and Credit Suisse have mandates to sell Ibitu’s wind and solar generation assets and G5 Partners to sell the hydroelectric dams. Ibitu has a total 877 MW of installed capacity, according to its website. Castlelake expects to fetch up to $1 billion for the assets, sources said.

The Ibitu sale is one of a growing number of M&A deals involving energy generation in Brazil, spurred by fast-growing demand for renewable energy.

Castlelake, Mubadala, Vibra and China’s State Power did not immediately comment on the matter. Broker XP, which will likely bid on behalf of managed funds, has increased exposure to energy after opening a trading firm. XP declined to comment.

Castlelake acquired Ibitu from Brazilian conglomerate Queiroz Galvao in 2019 and decided to resell it last year.

Groups interested in the wind and solar farms are expected to deliver their binding offers by early April. A similar deadline has been set for the hydroelectric dams sale, the sources added.

Mubadala last year offered Renova Energia 1.1 billion reais ($213 million) for Brasil PCH, which holds small hydroelectric dams. However, other investors in the dams with right of first refusal made the acquisition.

Other asset managers, Denham Capital and Actis, have also engaged with those interested in their Brazilian renewable energy assets. Actis sold Echoenergia to Equatorial Energia SA for $1.7 billion last October. Denham Capital is considering the sale of its company Rio Energy.

Demand for renewable energy assets has boomed as more companies begin transitioning away from fossil fuels due to climate change. Last year, fuel distributor Vibra, formerly known as Petrobras Distribuidora, bought 50% of trader Comerc, a leader in Brazil’s unregulated energy market, with a large portfolio including renewable energy generation.

Natural gas producer and thermoelectric generator Eneva SA also agreed to acquire renewable energy company Focus Energy in December for $366 million.

($1 = 5.1595 reais)