MPX, a company with the largest portfolio of licensed integrated energy projects in South America, plans to raise just over R$ 1000 million (€ 423 million) through a capital increase that involves German energy major E.ON, which intends ultimately to invest approximately € 350 million for a 10 % stake in MPX.
The two companies have come to an agreement to create a 50/50 joint venture which will develop power generation and related supply and trading activities in Brazil and Chile. The partnership aims to develop a total capacity of 20 000 MW in Brazil and Chile, which will make it the largest private energy company in Brazil. The generation capacity planned represents around 20 percent of Brazil's total current capacity.
MPX owns 11000 MW in projects already licensed that will be partially contributed to the JV with 50 percent of the following projects: Açu Power Projects in Rio de Janeiro (5,400 MW), Castilla Project at Chile (2,100 MW), Sul and Seival Power Plants in Rio Grande do Sul (1,300 MW) and the TPP Parnaíba expansion in Maranhão (2,200 MW). In addition, for the Açu Power Projects, E.ON will have a call option on behalf of the JV for additional 38.9 percent of the project at book value, thus enabling each of the partners to achieve a 50 percent economic interest in the project.
“Through this JV, MPX will be able to make use of E.ON’s global platform, expertise in cross-technology project development, senior management experience and extensive capabilities in generation. This is a highly strategic and value enhancing partnership for both companies. Together, we can create a business that is much more than a sum of its parts, generating exciting growth opportunities in the years to come for all of our stakeholders”, said Eike Batista, MPX’s chairman.
Today’s announcement marks E.ON’s first investment in Brazil, one of its target growth markets outside of Europe. Johannes Teyssen, CEO of E.ON AG, said: “For us, MPX is more than a great investment opportunity in Brazil and Chile. The strategic partnership, combining MPX’ local expertise and access to natural resources with E.ON’s global scale and capabilities, will enable us to create significant value in thermal and renewable power generation in Brazil. The already existing 11,000 MW development pipeline will form a platform to quickly achieve a significant market position in one of the world’s fastest growing power markets.”
Under the agreement, MPX will retain its current ownership of the contracted power capacity under construction (approximately 3000 MW) as well as the natural gas concessions in the Parnaíba basin, held through OGX Maranhão, and of the Seival coal mine. Via its targeted 10 percent shareholding interest in MPX, E.ON will become a minority strategic partner and support those projects as well.
E.ON and MPX expect to close the transaction in Q2 2012, after the due diligence, final negotiations, and signing of definitive joint venture agreements have been concluded.
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