Elliot Fund continues to pressure EDP to sell its assets in Brazil

  • ECO News
  • 20 March 2019

Elliot Fund is still pressuring the Portuguese electricity corporate, EDP, to sell its assets in Brazil, despite it not being part of EDP's strategic plan, presented last week.

Elliott Management is still pressuring EDP to dispose of its assets in Brazil. Elliott, which is led by Paulo Singer, had already suggested that the electricity corporate should take that step, ut the strategic plan presented by the Portuguese company last week has shown that EDP has other plans. Sources close to the matter, quoted by Bloomberg, have guaranteed that Elliot Fund will not refrain from pressuring EDP to get rid of these assets, as it considers this to be the best way to “unlock some revenue” for shareholders.

The strategic plan presented by EDP shows that the company is expecting to sell around €2bn of its assets, especially in Portugal and Spain. Elliott detains 2.9% of the capital of the Portuguese company since November 2018, and it has publicly manifested its interest on the matter of the Brazilian assets earlier in February, considering this to be the best route for EDP to boost profits and noting that the strategic plan is ignoring completely the opportunity to sell its 51% stake at EDP Brazil, Bloomberg shows.

The disposal of the assets held in Brazil was one of the issues addressed in the letter sent by the activist fund to EDP. It suggested that EDP should divest 51.2% of its stake in EDP Brazil (which corresponds to the whole stake held by EDP at EDP Brazil), as it would give the company a €2.3bn return, helping to minimize the average debt costs.

However, the company has different plans. Not only it doesn’t intend to dispose of its shareholding position at EDP Brazil, as it also is talking about expanding its influence in the country.

Until 2022, EDP is planning to invest about 25% of its total CAPEX planned for the next three years in Brazil (€3bn).