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China Three Gorges could raise US$2 billion with Brazil IPO

Offer likely launched before end of December, but will depend on market volatility and results of elections in October.

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Offer likely launched before end of December, but will depend on market volatility and results of elections in October.

ARTICLE BY

PUBLISHED

UPDATED: 22 Dec 2023, 4:40 am

China Three Gorges Corporation is evaluating the launch of an initial public offering (IPO) for its Brazilian unit, which could raise about US$2 billion.

The Chinese state-owned energy company has been in talks with potential advisers to prepare for the potential sale of shares, according to Bloomberg. The IPO would raise funds for expansion in Latin America.

The listing could take place as early as the end of this year, according to the news agency, which quoted sources close to the deal.

The IPO could value China Three Gorges’ Brazilian assets at around US$8 billion, the sources said, and even reach US$10 billion, according to one.

The sources added that considerations are at an early stage and the timing and size of the share sale could still change, while market volatility and the results of Brazil’s October general elections could also weigh on any transaction, one of the people added.

At US$2 billion, the IPO of China Three Gorges’ Brazilian unit could be the largest in the country since Rede D’Or São Luiz SA was offered in December 2020.

Brazil is a “priority country” in the Chinese company’s international growth strategy. Since 2013, the state-owned company has been investing in renewable energy assets in Brazil, including wind and solar power, and has become the second largest private power generator in the country.

In 2016, it acquired Duke Energy Corp.’s Brazilian assets, which included about 10 hydroelectric plants, for US$1.2 billion.

Three Gorges has remained an active buyer in recent years, despite increased scrutiny of Chinese investments abroad. The subsidiary China Three Gorges Renewables Group raised 22.7 billion yuan (US$3.6 billion) in an IPO in Shanghai in June, CLBrief reported.

 

UPDATED: 22 Dec 2023, 4:40 am

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