ContourGlobal Seeks Brazil Power Deals But Not Engie Coal Plants

(Bloomberg) -- ContourGlobal Plc, a London-based power generation company, is still seeking acquisitions in Brazil after abandoning talks to buy two coal-fired power stations from Engie SA.

The company is looking “closely” at wind assets that state-owned Eletrobras is trying to sell, and will consider both renewable and traditional energy sources, according to Alessandra Marinheiro, ContourGlobal’s chief executive officer for Latin America.

CountourGlobal is looking to expand its portfolio after raising more than 470 million pounds ($664 million) in an initial public offering in London in November. Latin America is an important part of the strategy and the company also plans to pursue opportunities in Colombia, Mexico and Peru. In Brazil, the focus is projects that have long-term power purchase agreements and a predictable revenue flow, Marinheiro said.

“There are many M&A opportunities in Brazil,” she said in a telephone interview. “We want to grow in the country and have seen a big consolidation in the market.”

ContourGlobal had been in exclusive talks with Engie since December regarding the two coal-fired power plants, which have a combined capacity of 700 megawatts. Courbevoie, France-based Engie is in the midst of a strategic shift to boost global investment in renewables and natural gas networks and back away from coal. It’s planning to close its coal plants in Chile, and the two facilities in Brazil are its last coal assets in the country.

Marinheiro declined to say why CountourGlobal decided not to pursue the deal with Engie, and the French company said in a statement that it wasn’t aware of ContourGlobal’s decision.

Eletrobras Auction

ContourGlobal co-owns two wind projects in Brazil’s northeastern state of Piaui with Eletrobras’s Chesf unit and is considering taking over the assets. Eletrobras plans to sell stakes in 70 wind farms and transmission lines in a June 7 auction as the company works to reduce costs and prepares to be privatized.

ContourGlobal is pushing for acquisitions in Brazil in part because it’s become harder in recent years to develop new energy assets. The country canceled two energy auctions in 2016 citing slumping power demand, and an event last week led to record low prices driven by pent-up interest from companies eager to get their projects moving.

“We are focusing on M&A in Brazil right now as auctions have been small and very competitive,” said Marinheiro.

To contact the reporter on this story: Vanessa Dezem in Sao Paulo at vdezem@bloomberg.net.

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Will Wade, Margot Habiby

©2018 Bloomberg L.P.