BNDES Authorized to Fund Eletrobras’s EDP Bid

BNDES would be able to finance Eletrobras’s bid for a stake in Portuguese state-controlled power company EDP under a new rule change. The government of President Dilma Rousseff has adjusted BNDES’ statutes, allowing the bank to use proceeds from external markets to fund the acquisition of assets or for projects and overseas investments by Brazilian companies. The move is being interpreted by observers as an indication that the development bank has been sanctioned to finance the high-profile acquisition. A BNDES spokeswoman says that the decree is very clear that only funds obtained overseas can be lent for asset acquisitions of this sort. That said, she notes, no final decision has been reached yet on any Eletrobras’s financing for the EDP transaction. Eletrobras and fellow Brazilian utility Cemig are part of a group of bidders for a 21.35% stake in EDP. Germany’s E.ON and China’s Three Gorges are reportedly also included in the bidding, the details of which are not yet public.