March 11, 2019 / 4:43 PM / 11 days ago

Brazil power company Neoenergia to seek banks to relaunch IPO -source

SAO PAULO/BRASILIA, March 11 (Reuters) - Shareholders of Neoenergia SA will soon seek advisers to relaunch an initial public offering (IPO) by the Brazilian power company controlled by Spain’s Iberdrola, a person with knowledge of the matter said on Monday.

Minority partners Banco do Brasil and Brazilian pension fund Previ intend to partially sell their shares in the offering, added the source. They have stakes of 9.34 percent and 38.21 percent, respectively.

Banco do Brasil and Previ declined to comment on the matter. Neoenergia and leading global wind power producer Iberdrola did not immediately respond to requests for comments.

Neoenergia’s new chief finance officer, Leonardo Gadelha, who was elected in February, will take office next week and work to prepare for the listing along with the shareholders, said the source, who spoke on condition of anonymity in order to discuss strategy openly.

Another source added, however, that formal mandates with investment banks will depend on market conditions, as a recent exodus of foreign capital from the Sao Paulo stock exchange has raised questions about investor appetite. No Brazilian company has pulled off an IPO so far in 2019.

In 2017, Neoenergia tried to list its shares on the Sao Paulo stock exchange, but it failed as pricing fell short of the expectations of the Brazilian shareholders.

Shareholders expect a higher valuation now, as Neoenergia’s results have improved since a merger with smaller rival Elektro in June 2017.

This time, shareholders are likely to hire a smaller group of investment banks to manage the IPO, the first source said. Nine banks were in charge of the listing two years ago.

The deal comes as state-controlled lender Banco do Brasil is seeking the sale of its noncore assets, including the Neoenergia stake. Previ is also interested in selling stakes in companies that have increased in value. Iberdrola has not expressed interest in selling its 52.45 percent stake.

In recent months, shareholders of Neoenergia tried to make a deal to sell their shares to Iberdrola, but they have not reached an agreement.

Iberdrola’s chairman, Ignacio Sanchez Galan, said in February he saw a possible IPO by Neoenergia this year.

Reporting by Carolina Mandl in Sao Paulo and Marcela Ayres in Brasilia Editing by Matthew Lewis

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