October 9, 2019 / 5:28 PM / a month ago

Iberdrola CEO sees improving business environment in Brazil, looks to expand

SAO PAULO (Reuters) - Spanish power company Iberdrola SA (IBE.MC) sees an improving business environment in Brazil and is looking for opportunities to expand, Chief Executive Officer Ignacio Galán told Reuters on Wednesday.

Galán said in an interview in Sao Paulo that Iberdrola, which operates in Brazil through its subsidiary Neoenergia NEOE3.SA, will participate in the next round of licensing for new power transmission projects in Brazil, scheduled by the government for December.

The company will also look at potential privatizations in the Brazilian power sector for possible acquisitions, Galán said.

“If opportunities arise on privatization of power distribution or power generation companies, we will evaluate,” Galán said. “We’re interested, no doubt.”

Iberdrola already plans to invest 30 billion reais ($7.31 billion) in Brazil through 2022, according to Neoenergia’s business plan, but could go beyond that depending on the opportunities. Galán said cash would not be a problem.

“We have funding, we have banks behind us, because our global debt levels are low. And our cash generating capacity is large, we generate around 50 billion reais per year as a group. It would be enough to buy a lot of things, so it is not a matter of money, it is a matter of opportunities,” he said.

Galán said there is a renewed, positive mood about Brazil because of the government’s proposed economic reforms. President Jair Bolsonaro has made restoring Brazil’s public finances to health one of his top economic priorities.

Iberdrola will boost its operations in the so-called free power market, where generators clinch long-term power supply deals directly with large consumers, Galán said. The sector is expanding following the government’s push for less regulation.

Neoenergia announced last month it will spend 1.9 billion reais to build a new wind farm in Brazil’s Northeast region. Around 70% of the power to be generated in the project will be sold directly to other companies in the free market.

Reporting by Luciano Costa, Marcelo Teixeira; Editing by Chris Reese and Grant McCool

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