The price of the shares of the Eletrobras privatization offer will be determined on Thursday (9), according to the operating schedule that should culminate in the privatization of the state-owned company.
The government decided to privatize Eletrobras, the main company in the Brazilian electricity sector. To this end, it will issue new shares and reduce Union’s stake in the company, in a process that could generate more than R$30 billion in total.
Once the predictions are confirmed, it will be The biggest stock offering on the Brazilian Stock Exchange since the massive capitalization of PetrobrasAnd the It was held in 2010.
The offer has been opened to major domestic and foreign investors, and the application will also be supplied with funds from FGTS. The government has authorized the use of up to 50% of the value of the account linked to FGTS For workers to participate in the process.
The deadline for investors to express their intent to buy and hold shares started last Friday (3) and ended on Wednesday (8). Pricing a stock’s value will depend specifically on investor appetite.
a The minimum price set by the government for the sale of shares is kept confidential. The prospectus indicates that the transaction will move at R$30.69 billion, taking into account the closing price of Eletrobras common stock on May 26 ($44).
The initial offering (of new shares) will be initially for 627,675,340 million shares. The secondary offering (current securities) will be for 69,801,516 million shares of BNDESPar. According to the prospectus, the operation may have a complementary stake of up to 15% of the shares of the IPO.
Start stock trading in b 3 It will be on June 13.
See below the questions and answers about privatization:
- How does the privatization of Eletrobras work?
- Where does the money go from privatizing Eletrobras?
- Who Can Buy Eletrobras Shares?
- Who can buy with FGTS?
- What is the share price?
- Will I be able to invest to the maximum?
- Will it be possible to recover at any time?
- What are the characteristics of electrical roles?
- What is the difference between the types of work?
- What is the price the valley To Eletrobras?
- Was this latest estimate speculation?
- Does this mean that stocks should not rise much in the short term?
Understanding the privatization of Eletrobras, the largest electricity company in Latin America
How does the privatization of Eletrobras work?
The government has chosen to carry out privatization by capitalization: the union will introduce shares of new Eletrobras on the stock exchange, and with this it will cease to be the controlling shareholder. The government’s stake in the company is expected to drop to 45%.
The union will have a preferred quota of a special class, the “golden quota,” which will grant veto power in deliberations on company regulations. This means that even after losing majority control, the government will continue to veto certain decisions made by Eletrobras.
Where does the money go from privatizing Eletrobras?
If all goes as planned, privatization should move R$67 billion over the next few years – of which R$25.3 billion will go directly to government funds. Another 32 billion will be allocated to the Energy Development Account (CDE) to mitigate tariff adjustments and support sectoral policies.
Who Can Buy Eletrobras Shares?
The stock purchase will be open to institutional and individual investors. Workers can buy using money from the stop compensation fund (FGTS), as was the case with the actions of Petrobras and gives yes.
Who can buy with FGTS?
Workers from any sector have resources in the severance pay fund (FGTS) will be able to use part of this balance to buy shares Electrobrass. The purchase will be made through so-called “joint privatization funds,” a device created in the 2000s that the government has already used to sell papers from other state-owned companies.
What is the share price?
The value of each share will be determined on June 9 and depends on demand, i.e. how many investors are interested and how much each one intends to invest.
Will I be able to invest to the maximum?
It is possible not. If the order is greater than the number of shares available, then a distribution will be made.
Will it be possible to recover at any time?
For those who invest with resources from FGTSYou will have to wait at least 12 months to request a stock refund. The money will then be returned to the account FGTS The worker, who will only be able to withdraw Conditions stipulated by law, such as unfair dismissal, retirement and acquisition of property, Among other things.
What are the characteristics of electrical roles?
Currently, there are more than 30 companies in the energy sector listed on b 3. Companies operate in the generation, transmission, and distribution sectors, where they can operate in more than one. Eletrobras, for example, operate in both generation and transmission.
Electrical utilities are less risky because they involve companies with long concession contracts and because they are an essential service. Since they have more predictable returns, margins and profits, they are a safe haven in times of crisis and good dividend payers.
The country continues to demand strong investments in this sector. In Brazil, the national system still relies heavily on power generation from hydroelectric plants, but progress has been made in wind and solar power, amid the need to expand a more sustainable production model.
What is the difference between the types of work? What will he offer?
There are two types of company stock: ELET3 and ELET6. The first, which ends with the number 3, corresponds to the common stock, which confers the right to vote. “In addition, in the event of a sale of the company, this type of paper also guarantees the shareholder’s part of the value obtained from the negotiations,” explains Fabio Lozada, CNPI analyst and founder of the financial education school Eu me banco.
On the other hand, ELET6 is compatible with Class B Preferred Stock, meaning that those who buy it have an advantage in receiving dividends. On the other hand, they are not given the right to vote.
In this initial offer, only common stock is available. “ELET3 shares will be sold, so that the union relinquishes control, and privatizes the company through a share offering,” says the economist.
What is the price the valley To Eletrobras?
The current market capitalization of Eletrobras is R$65.7 billion, considering the closing price of the shares on June 3. The value represents a jump of 25.7% compared to the end of 2021. The historical maximum was recorded in June 2021, when the company was valued at R$74.5 billion on the stock exchange, according to data from the financial information provider Economists.
Was this latest estimate speculation?
not necessarily. The value of Eletrobras shares has increased significantly in 2022. Since the beginning of the year until the market closed last Friday (3), the company’s shares are up 28.2% in ELET3 and 31.7% in ELET6.
But other companies in the electricity sector are doing well in the stock market this year. This is because it is common for investors to search for the assets of these companies in turbulent market times. This is what is called in the language of “defensive companies”.
This attention has been given because energy company contracts are generally long-term and inflation-adjusted. Thus, there is a more stable profitability even in difficult times for the economy.
In fact, Eletrobras rise more than the others with the possibility of privatization. Today, energy produced by state-owned factories is sold to consumers at prices lower than those practiced by the market. By privatizing and removing factories from this system, Eletrobras will be able to increase their revenue from selling energy at the (higher) market price.
It is difficult to quantify the impact of this latest rise on the prospects for privatization alone. But, yes, the market has “set a more positive scenario, considering that the chances of changes are very high”, says Joao Daronco, analyst at Suno Research.
Does this mean that stocks should not rise much in the short term?
For Joao Daronco, an analyst at Suno Research, Eletrobras’ latest estimate is underestimating the investment’s “margin of safety.” In other words: When you buy a stock that has recently appreciated in value, it tends to have a lower “ceiling” to increasing volume that interests shareholders.
But there are two considerations: return FGTS Very low, which makes it possible to get a more profitable investment in Eletrobras shares. Another is that investing in variable income is more recommended for those who intend to make this investment over the long term.
“The short term is driven more by rumors and news than fundamentals and operational data. An investor looking at Eletrobras — and in any publicly listed company — should pay more attention to the longer term,” says Daronko.
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