Bidders Circle AEI Gem

After failing to IPO its AEI unit, Ashmore and co-investors in the Houston-based holdco are heard to be swiftly moving to a plan B liquidity event that involves selling off key assets. Executives familiar with the situation say talks to sell Elektro – Brazil’s eighth largest power distributor – are in full swing, with substantial interest from a number of potential bidders. Some 80% of AEI’s assets are in LatAm, the single largest by revenue being Elektro, whose market cap stood at BRL3.6bn mid-October, when trading was halted due to IPO plans. Prior to launch of AEI’s aborted equity offer, CPFL was reported in talks with Elektro about a deal, according to press reports at the time. But several others are now also heard interested in the distributor, which in 2008 posted net revenue of $1.4bn, according to AEI’s IPO prospectus. In H1 2009, total net revenue at Elektro clocked in at $566m. That accounts for 15% of AEI’s revenue in the same period. For full year 2008, Elektro’s Ebitda corresponded to 38% of AEI’s consolidated Ebitda of $1.34bn. Elektro’s debt as of June 30 included BRL543m in 2011 debentures and BRL451m in notes with maturities ranging from 2009-2011, according to the IPO prospectus. AEI is heard to have hired Itau BBA to advise on a sale of Elektro, according to executives away from the process. Stakeholders in the energy generation and distribution holding company include Goldman Sachs, GIC, Eton Park and BlackRock. Officials at Elektro and Itau BBA were not immediately available for comment.