LatinFinance - July 2013 - 38

________________________________________________________________________________________________________________

Best corporate for shareholder transparency

Companhia Energética de Minas Gerais

________________________________________________________________________________________________________________

Open for business
When it comes to communicating its strategy to the market, Cemig is in a
league of its own

received Brazilian equity transactions in
2012, and winner of a LatinFinance Deal of
the Year award.
Cemig has been listed in Brazil
since 1960, and in 1993 was one of the
first LatAm companies to list American
Depository Receipts, when it debuted
in New York. The deal paved the way
for others to list in the US. Cemig holds
roadshow and one-on-one meetings with
investors worldwide. It is a regular at

©REUTERS

hen Companhia Energética de Minas
Gerais (Cemig) followed through
on its promise to increase the free float
of shares of its subsidiary last year, the
company put its strong relationships with
investors to the test.
It had to convince buyers to overlook
the illiquid trading levels at Transmissora
Aliança de Energia Elétrica (Taesa) and
instead accept pricing of the 27 million
units (a unit is one ordinary and two

Cemig: communication lines open
preferred shares) through a price range as
if it were an IPO. The range was based on
the valuation of the research analysts in
addition to trading levels.
A global investor education effort
involved speaking to more than 110
accounts and included three analysts.
The strategy paid off: the final
transaction, Taesa’s $876 million equity
follow-on, was one of the few well-

38 LatinFinance July 2013

investor events. And CFO Luiz Fernando
Rolla is president of the Instituto Brasileiro
de Relações com Investidores (IBRI).
Cemig frequently appears among
the list of winners of awards for investor
relations practices in Brazil, so it is no
surprise that voters for LatinFinance’s
2013 Best Corporates in the Capital
Markets awards also ranked the company
highly in terms of transparency.

The company is a regular issuer in
Brazil’s domestic bond market. A $785
million-equivalent sale last year from the
Cemig Geração e Transmissão subsidiary
was the first to qualify for the Novo
Mercado for bonds – a platform with
tighter regulations designed to encourage
liquidity, transparency and increased
secondary market trading.
This year, it followed up with a 2.16
billion real debenture sale in March, again
one of the few issuers to use the Novo
Mercado platform. Despite comments in
recent years that a cross-border deal is
a possibility, Cemig has not issued one
since 1996, according to Dealogic. Cheap
domestic funds and legal restrictions on
government-owned issuance abroad have
kept them out.
Cemig Distribuição is planning to issue
more local debt this year, Paulo Pereira,
superintendent of corporate financial
management, told LatinFinance in April,
saying the Novo Mercado is helping
companies achieve longer tenors.
“We believe this initiative is very
positive for Cemig as the greater the base
of investors, the more we will be able to
place longer-term debt,” Pereira says.
Cemig Geração e Transmissão, in contrast,
is unlikely to issue debt unless it makes a
big acquisition. Another domestic sale was
perhaps in the works this year from the
Taesa transmission operator subsidiary,
according to regulatory documents.
Meanwhile, Cemig is increasingly
turning to new equity instruments for its
investment program. Brazil’s private equity
fund structure (Fundo de Investimento em
Participações, or FIP) offers a guaranteed
investment in a debt-like instrument. The
company has two funds. “We commit less
capital. That means we have more to spend
on other acquisitions and can increase
market share,” he says.
On the M&A front, Cemig was in June
discussing the purchase of Petrobras’ stake
in the Brasil PCH hydroelectric generation
company, as it promptly and duly informed
the markets. LF

LatinFinance - July 2013

Table of Contents for the Digital Edition of LatinFinance - July 2013