Understand the impacts of privatization on Eletrobras’ actions

When talking about privatization in Brazil, there is always the understanding that the Federal Government will sell a certain company to a group or company that pays the highest price.

This is not the case with Eletrobras. Its privatization will take place via the capital market: that is, the company’s shares will be dispersed among several shareholders.

The government is the majority controller, with more than 70% of the shares. He will continue to be the majority shareholder, but will gain several partners through this sale. Eletrobras will sell new shares on the market, gradually diluting the government’s share — until it holds 45%.

The economics analyst CNN Thais Herédia explains that the process ends up being a privatization because Eletrobras is no longer managed as a state-owned company, as it is today. The company is now managed as a holdingin which the government remains the majority shareholder but most of its capital is diluted in the private sector.

In this way, says Herédia, it creates conditions to provide greater investment capacity for the state-owned company, with efficiency gains, cost reductions and safer and more efficient service provision.

For the analyst, what consumers want is to know that the Brazilian electricity sector is well managed, that prices are set as correctly as possible, and that there is competition even in the sectors in which Eletrobras currently has the greatest weight.

Herédia highlights that Eletrobras is responsible for 30% of the generation and almost 40% of the energy transmission in the country today, having been higher in the past, but ended up reducing the market because it lost investment capacity and management capacity.

Impact on actions

In the medium and long term, the outlook is that it could rise, due to the policy that includes a series of obligations that were not in the original plan of this process.

This Thursday (19), the company’s shares are worth R$ 43.40, rising 3% today throughout the day after the decision of the Federal Audit Court (TCU), which approved by majority the continuation of the capitalization of Eletrobras. This year, the company’s shares rose more than 30%.

These numbers show the interest of investors, and that they see capitalization as something positive for the company, says Priscila.

Brokers and banks estimate that the share will reach an average price of R$ 54.11, an appreciation of more than 20% this year. As a result, there were six buy recommendations and one neutral recommendation, showing that the market sees potential for appreciation.

Yazbek concludes that, in a conversation with Paulo Bittencourt and João Lorenzzo from Encore Asset Management, they both stated that putting the FGTS money in Eletrobras shares is an interesting alternative, but he points out that there are some caveats that must be taken into account before applying the guarantee fund money.