Iberdrola has signed a strategic alliance with GIC to expand transportation networks in Brazil

Iberdrola is progressing at a pace set in its 2023-2025 Strategic Plan. The company has signed with GIC, one of the world’s leading institutional investors, a strategic agreement for the development of transportation networks in Brazil for R$2,400 million -430 million euros – as reported today by the National Commission of the Securities Market. (CNMV).

Both companies will co-invest in transportation operating assets (Jalapao, Santa Luzia, Dorados, Atibaia, Peguaçu, Sobral, Narandiba and Rio Formoso), with a total of 1,865 kilometers of transmission lines and an annual revenue of R$430 million – about 77 million euros – with an average concession period of 25 years. Iberdrola will own, through its subsidiary in Brazil, a 50% stake in the company, worth R$1,200m – €215m¹-. The transaction was executed at multiples of 13 times gross operating profit (Ebitda).

next to, Iberdrola and GIC have signed a framework agreement to jointly participate in future tenders for electricity transmission assets in Brazilincluding the auction scheduled for June 30, 2023. Thus, GIC becomes the preferred partner for assets under construction and upcoming auctions.

The alliance includes the right to acquire a 50% stake in other assets under construction and operation (Itabapoana, Guanabara, Vale do Itajaí, Lagoa dos Patos, Morro do Chapéu, Estreito, Alto do Parnaíba, Paraíso, Potiguar Sul) which covers an area of ​​6279 km. The total annual remuneration of these assets is equivalent to about R$1,300 million – about €233 million¹-.

Once the process is in place, the Iberdrola subsidiary in Brazil, new energywill stop debt consolidation of operating assets, which are considered to be within the perimeter of the transaction.

GIC is a leading global investment firm established in 1981 to ensure the financial future of Singapore. As Singapore’s foreign exchange reserves manager, GIC takes a disciplined long-term investment approach, and is committed to investing in solutions critical to accelerating the energy transition.

The Brazilian subsidiary of Iberdrola will have a financial investor with a unique international reputationallowing the company to reinforce its firm commitment to growth in the transportation sector in Brazil.

Iberola asset rotation and alliances for growth and disarmament

This transaction is part of a non-essential asset rotation programwhich has already been achieved 100% to support Iberdrola’s standard investment plan of 47,000 million euros.

As part of your investment plan, Almost 27,000 million euros will be allocated to electricity networks around the worldThis will allow the network assets managed by the company to increase to 56 thousand million euros in the next three years.

next to, About 17,000 million euros will be allocated to renewable energy workas it plans to increase its portfolio by more than 12,000 renewable megawatts.

In recent months, the energy group has closed several long-term alliances to strengthen it Decarbonization of the economy:

• Iberdrola recently signed an agreement to sell more than 8,400 megawatts of gas combined cycles in Mexico for $6,000 million.
• Last month, Iberdrola and MAPFRE made progress in their strategic alliance by integrating 100 new megawatts through a joint venture, which already has 450 megawatts.
• Iberdrola and BP also signed a strategic alliance in March to deploy 11,700 fast charging points in Spain and Portugal.
• At the beginning of the year, Iberdrola and Norges Bank Investment Management signed an alliance to jointly invest in 1,265 MW of new renewable energy in Spain.
• In addition, a few months ago Iberdrola signed an alliance with Energy Infrastructure Partners to co-invest in the Wikinger offshore wind farm and enhance its offshore wind portfolio.

Brazil, a country with great growth potential

Iberdrola operates in Brazil through its subsidiary Neoenergia, a leader in Brazilian networks with more than 710,000 km of power lines.. It controls five distributors in 18 states plus the country’s federal district and is a renewable energy giant, with 5,200 MW installed, 90% of which is green.

The Brazilian company Iberdrola has already established itself as an energy benchmark in Brazil: it has a customer base of 16 million customers. The company has a workforce of more than 15,000 people and provides indirect jobs representing more than 28,000 jobs. Neoenergia began operating in 1997, but took a huge leap in 2017, when it merged with Elektro, also owned by Iberdrola. It debuted on the stock market through a public sale offering (IPO) on July 1, 2019 on the B3 segment of Novo Mercado of the Brazilian Stock Exchange.

¹ Calculated on the basis of the Brazilian Real / Euro exchange rate as of April 24, 2023, published by the European Central Bank, of 1 Euro per 5.5788 Brazilian Real.