Investors in Eletrobras and Itaú are among Copel’s main shareholders

Companhia Paranaense de Energia Elétrica (Copel) communicated to the market the names of two relevant shareholders after the privatization process concluded with the public offering of shares on B3, the São Paulo Stock Exchange, held on the last 10th.

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Relevant shareholder communication is a mandatory practice in the capital market, which maintains the anonymity of investors with a minimum stake in publicly traded companies.

In the case of Copel, the name of Relevant shareholder must be reported from 5% of the participation in the new corporation, following the regulations of the Securities and Exchange Commission (CVM), up to 10% of the shares, the participation limit provided for in Copel’s statute, which was approved in July with the aim of privatizing the company from Paraná with diversified capital and without a majority shareholder.

Last week, Copel announced that the investment fund 3G Radar increased its participation to 85.1 million preferred sharesrepresenting approximately 5.07% of the company’s capital. Preferred shares do not have voting rights, but priority in receiving dividends.

That is, buyers have the main focus on the appreciation of shares and return on investments. “Radar also declared that there is no agreement or contract regulating the exercise of voting rights or the purchase and sale of securities issued by the Company to which the signatory is a party”, says Copel in the notice to the market on the last 14th.

3G Radar is headquartered in Rio de Janeiro and was created in 2013 by 3G Capital, which has an address in New York, under the management of trio of billionaires Jorge Paulo Lemann, Marcel Telles and Beto Sicupira. Together, the partners had more than a 30% stake in the shares of Lojas Americanas, a retail giant that filed for bankruptcy earlier this year.

In Brazil, 3G Radar is an “independent investment company”, according to the fund’s website, which is the main minority shareholder of Eletrobraswhich underwent a privatization process in 2022 under the follow-upa project that inspired Copel’s privatization operation.

According to the formatting of Eletrobras’ capital stock, with share positions up to July 31, 3G Radar has 10.99% of the preferred shares, which represents almost R$ 766 million of the company’s capital. The fund still has a stake of 3.8 million common shares, which means only 0.19% of the shares entitled to vote at Eletrobras meetings.

“We invest in undervalued companies that can generate risk-adjusted absolute returns above the long-term Brazilian cost of capital. We prefer to look for value in companies with ‘moats’, consistency, predictability and sustainability. We prioritize well-managed businesses, with a consistent operating history, solid balance sheet, long-term perspective of earnings per share growth and cash flow generation”, declares 3G Radar on the official page of the investment fund.

Even with only 1.33% of the total shares, 3G Radar was accused, in June, of influencing the formation of the Board of Eletrobras with the nomination of three of the nine elected members, among them, the co-founder of the fund in Brazil, Pedro Batista by Lima Filho.

At the time, 3G Radar responded in a press release that “the nominations for the composition of the board of Eletrobras were made by mutual agreement between the board members, as mandated by the company’s governance practices.”

US fund will have voting rights in Copel

Among Copel’s new shareholders, the US fund GQG Partners, from Indian billionaire Rajiv Jainacquired a stake of 59 million common shares in the public offering for privatization on the Stock Exchange, which represents 5.6% of the company’s shares from Paraná. Common shares enable the shareholder to participate in political life with the right to vote in the strategic decisions of the new corporation.

“GQG declared that this is a minority investment that is not intended to change the Company’s control or administrative structure. Currently, GQG Partners does not intend to acquire, on behalf of its clients, any additional shares issued by the Company with the intention of acquiring control or changing the administrative structure of the Company”, clarified the fund in the correspondence sent to Copel.

In Brazil, the management company GQG Partners bought 5.23% of the preferred shares of Itaú Unibanco Holding SAin 2022, totaling just over BRL 253 million shares, calculated at BRL 5.9 billion in the quotation at the time of the transaction in the market.

In Copel’s voting stockholders, the State of Paraná holds 17.9% of the total shares, but the government’s participation should be reduced to approximately 15% after the conclusion of the offer of the supplementary allotment of Copel’s shares, at B3, on the 7th of September.

Paraná still has the “golden share” device for vetoing strategic decisions by Copel’s shareholders to maintain the interests of the State and the company’s service to Paraná residents. BNDES Participações holds 10.2% of common shares.