CPFL Renewables IPO Prices at Bottom of Range

Brazil’s CPFL Energias Renovaveis has priced a BRL1.04bn ($446m) IPO, at the bottom of the range. The renewable energy arm of utility CPFL is selling 39m primary shares and 44m secondary shares at BRL12.51 each, according to the CVM, versus a BRL12.51-BRL15.01 range. The share total includes a 15% greenshoe. The deal was the latest Brazilian IPO to rely on special support, in this case boosted by a guarantee from lead manager BTG Pactual to buy 56% of the shares, and a pledge from pension fund Previ to buy around BRL400m worth of shares. Cash from the primary portion of the IPO will go to existing developments and new projects. Selling shareholders in the secondary offering include investor Roberto Sahade and funds linked to Patria Investimentos and Bradesco. Parent company CPFL Geracao is expected to cut its holding in the unit to 57.6%, from 63.0%. Bank of America Merrill Lynch, BTG Pactual and Itau were global coordinators, with Banco do Brasil, Bradesco and Morgan Stanley as bookrunners. Formed through the 2011 merger of CPFL Energia and ERSA, CPFL Renovaveis operates hydroelectric, wind, solar and other types of renewable power generation in Brazil, with 5,553 megawatts installed capacity. The deal was the last actively marketed Brazilian equity transaction in the pipeline. Other Brazilian issuers awaiting launch, such as airline Azul and fleet outsourcing specialist Ouro Verde, will be encouraged by CPFL Renovaveis getting done. However, three of the last four Brazilian IPOs have needed some kind of support, with Biosev offering a put option and Smiles relying on a pledge to buy shares by General Atlantic.