Brazilian investment company Votorantim and Canada Pension Plan Investment Board (CPP Investments) are to consolidate their energy assets in Brazil.
The two companies will create an integrated renewable energy firm with an installed capacity of 3.3GW.
The combined entity will have net revenues of BRL5.8bn ($1.05bn), based on the 12 months to 30 June.
Its diversified energy portfolio will include 2.3GW of hydroelectric capacity and 1GW of capacity from wind power assets, as well as 0.6GW of operational capacity.
The process of asset consolidation and public listing will be carried out in two separate transactions.
Under the first transaction, VTRM, a joint venture company of Votorantim Energia and CPP Investments, will acquire the two companies’ equity stakes in various renewable energy assets and consolidate them.
These will include Votorantim Energia’s stake in hydropower assets, Votorantim Comercializadora de Energia, power producer Companhia Energética de São Paulo (CESP), and VTRM’s existing wind and solar assets and projects.
CPP Investments will also invest a further BRL1.5bn to increase VTRM’s capital base.
As part of the second transaction, VTRM has submitted a proposal to CESP’s board of directors for merging CESP’s shares into VTRM and further consolidating assets.
The proposal will be discussed by an independent committee of CESP’s board.
Votorantim president João Schmidt said: “Alongside a partner like CPP Investments, which has shared our long-term views on energy since 2017, we are ready to accelerate our role in the sector.
“Through the assets’ consolidation into a single platform, Votorantim and CPP Investments will share in a new cycle of growth and value generation together with current CESP shareholders, following the highest governance standards of the Novo Mercado segment.”
CPP Investments managing director and sustainable energies head Bruce Hogg said: “We continue to see opportunities to invest in high-quality renewable energy assets in Brazil that are well-suited to our long-term investment strategy.
“This transaction will create a diversified and well-capitalised platform primed for further growth in the country’s power sector.”