Engie Brasil Launches R$5.7 Billion Share Offering to Acquire Jirau Hydroelectric Stake

Engie Brasil’s board of directors approved a primary public offering of ordinary shares worth R$5.744 billion to acquire a 40% interest in Jirau Energia, the concession holder operating the Jirau Hydroelectric Plant in Rondônia. According to sources cited by Brazil Journal, the company aims to raise R$8.3 billion through the offering. The operation requires approval from shareholders at an extraordinary general meeting scheduled for July 2, 2026. The transaction would transfer the Jirau stake from Engie Brasil Participações, the parent company holding 68.7% of the listed subsidiary, to Engie Brasil Energia itself through a contribution-in-kind structure where the parent would receive newly issued shares in exchange for the hydroelectric asset.

The Jirau plant comprises 50 generating units with installed capacity of 3,750 megawatts on the Madeira River. An appraisal by Apsis valued the 40% stake between R$5.39 billion and R$5.93 billion, with a midpoint of R$5.66 billion, subsequently updated to R$5.744 billion using CDI adjustments through June 30, 2026. Goldman Sachs calculated the transaction implies an EV/EBITDA multiple of approximately 10 times for 2025. Bradesco BBI assessed the operation as neutral to slightly positive, noting alignment between Jirau’s implicit return and Engie’s perceived cost of capital, though the asset’s contracted status through 2034 limits short-term value appreciation potential.

BTG Pactual projects the transaction could reduce Engie’s leverage by 0.4 times, potentially reaching 1.2 times if the capital increase is fully cash-subscribed. This deleveraging would partially offset the impact of a R$2.4 billion prepayment related to UBP obligations. The offering will be conducted under automatic registration procedures with Brazil’s securities regulator CVM, with Itaú BBA and Santander serving as coordinators. Existing shareholders will have preemptive rights to subscribe proportionally to their current holdings, preventing dilution. Engie Brasil Participações currently holds 68.7% of the listed company, Banco Clássico owns 9.9%, and 21.4% trades publicly. Goldman Sachs maintains a sell recommendation with a R$33 price target, citing a real internal rate of return of 8.5% compared to an 11.5% average for covered generation companies. Bradesco BBI maintains neutral with a R$38 target, while BTG Pactual holds neutral at R$33.