Iberdrola plans to purchase Brazilian power distribution business, Elektro Electricidade e Servicos, for €1.77bn ($2.38bn).
Iberdrola will own 99.68% of Elektro, which supplies electricity in São Paulo.
The purchase by Iberdrola is in sync with its strategy, under which the firm is now generating more than half of its power outside Spain.
Ashmore Energy International (AEI) will sell Elektro, along with stakes in nine other power businesses, which it values at $4.8bn.
The sale accounts for about 80% of AEI's assets, including electricity and gas distributors in Latin America and a power plant in Poland.