(Rio Bravo) May 23, 2012 – Rio Bravo, an independent Brazilian asset manager co-founded by former Central Bank president Gustavo Franco, completed a final closing for its funds targeting renewable energy projects. The private equity fund FIP Rio Bravo Energy, now totaling R$463M (approx. US$275M), includes commitments from international investors, pension funds and foundations.
“This is an important step for our firm”, said Russell Deakin, the managing director of Rio Bravo in Miami, responsible for fund raising in North America and Europe. “Our fund was a watershed for the Brazilian private equity industry as we were able for the first time to have international and domestic investors in the same fund as we structured our fund along international lines and our Brazilian LPs are not part of the investment committee. This and the attractive risk/reward component of fund facilitate the fund raising.
The fund’s resources are already committed and will be used to implement renewable energy projects.
Created from the demand from pension funds, the majority of business representatives from the electricity sector, the fund has already established three partnerships. One was signed with the mining group Orteng and resulted in the first investment portfolio in March last year. The objective of this union, according Sergio Brandão, a partner at Rio Bravo, is developing a portfolio of ten run-of-the-river small hydro power plants (SHP), totaling 161 megawatts. Of these, two plants will begin to be constructed this year while the others are under development and will be built as the licenses for the facilities are being obtained.
Rio Bravo also signed partnerships with Servitec, São Paulo, which enabled background participate in the auction A-3, last August, and Eletrosul, Eletrobras group. The company is developing three clusters of wind farms, which together will total 502 MW in Santana do Livramento, Chui and Santa Victoria dos Palmares, cities located in Rio Grande do Sul.
For the choice of the three partners, the asset management company has analyzed more than 150 projects. “We seek a mix between free and regulated markets. We have 20 years contracts with counterpart of the energy distribution, closed in government auctions, and also direct sales to free market consumers that should give an interesting return to the bottom, “explains Claudio Ferreira, a partner at Rio Bravo.
He said the first wind farm invested by the fund, in partnership with Eletrosul in Santana do Livramento, will start operation in December this year, 15 months before the deadline set by auction. “Until now the focus of the development of wind energy sector has been the Northeast. The fund will give a major boost to the development of this segment in Rio Grande do Sul, putting it on another level of importance,” said Sergio Brandão.
Today, 30 pension funds and foundations invest in FIP Energy I. “As a rule, the energy sector contracts are long term, adjusted for inflation, which generate enough certainty for investors. Moreover, the energy sector has always reacted better than the Ibovespa steady stream of dividends,” adds Ferreira.
With more than US$ 3 billion in assets under management, Rio Bravo operates in private equity, infrastructure and growth capital funds, real estate funds, and fundamental public equity funds, among others.
The management company, founded in 2000, has offices in Sao Paulo, Rio de Janeiro and Recife, Brazil, and Miami, United States of America.