EDB Preps Selldown

Energias do Brasil plans to hold a follow-on equity sale today, which would raise BRL801m ($501m) at Wednesday’s closing price. The 19.9m all-secondary sale represents parent Energias de Portugal’s move to reduce its stake in the Brazilian distributor and generator under a plan to raise EUR500m this year through asset sales, as it tries to keep debt levels under control. EDB shares closed at BRL36.60 Wednesday, dropping 1.82%, and have lost 8.8% since the announcement of the deal May 16. “This is a good moment to sell in the sense that Brazil is very popular and expected to grow,” says a Europe-based analyst covering EDP. “However, everyone knows they need to get cash and they are in a hurry, and this may be putting pressure on the selling price.” The Portuguese utility EDP will reduce its 49.1% stake in EDB to 35.3% if the sale includes a 10% greenshoe, with the free float increasing to 48.8% from 35.0%. Banco Espirito Santo, Itau, Morgan Stanley and Santander are leads. EDB operates hydroelectric and wind generation assets, as well as distribution companies.