Gerdau invests in new renewable energy generation platform in Brazil

by David Fleschen

Gerdau, the largest Brazilian steelmaker, announced today (29), a partnership with Newave Capital (NW Capital), a Brazilian investment manager focused on the energy sector, for the acquisition of an equity stake in the renewable energy generation platform, Newave Energia. The new company will have a 33.33% stake held by Gerdau, through its new business division - Gerdau Next -, and a 66.67% stake held by NW Capital. The formalization of the operation is subject to the usual conditions precedent in operations of this nature, including approval by the competition authorities.

The deal also includes the acquisition of long-term power by Gerdau and its subsidiaries, corresponding to up to 30% of the power generated by the power generation projects directly or indirectly held by Newave Energia and its subsidiaries, on a self-production basis. The operation aims to generate more competitive steel production costs, in addition to supplying Gerdau's industrial units in Brazil with renewable energy as part of its commitment to reduce greenhouse gas emissions.

Newave Energia was created with the objective of developing greenfield power generation projects with a capacity of approximately 2.5 GW, exclusively from solar or wind sources, with expected start-up in 2025 and 2026, and of investing in brownfield projects and in electricity trading activities, whether in the retail, directional and/or pre-payment transaction modality.

Gerdau Next will invest up to R$ 1.5 billion in Newave Energia, divided into two stages. In the first phase, the company will contribute R$ 500 million over 2023, while the second phase contemplates the investment of up to R$ 1 billion, conditioned to the achievement of certain performance goals. In turn, the investment made by NW Capital, together with Investment Funds distributed by XP Investimentos, will be R$ 1 billion in 2023 and, in a second phase, of up to R$ 2 billion to be subscribed by investors according to market funding.

Source and Photo: Gerdau

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