BRAZIL Trends and Developments Contributed by: José Virgílio Lopes Enei, Mauro Bardawil Penteado, Vitor Fernandes de Araujo and Antonio Paulo Kubli Vieira, Machado Meyer
Introduction Brazil is a key jurisdiction for M&A transactions in the energy and infrastructure sectors, combining insti- tutional maturity, asset scale and long-term growth opportunities. The confluence of infrastructure mod- ernisation, sustainable energy commitments, Brazil’s large market and capital inflows has made Brazil a core destination for both strategic acquirers and finan- cial investors seeking exposure to regulated, ESG- compliant assets. While short-term macroeconomic headwinds (high interest rates, fiscal risks, global uncertainty) may temper the pace of new investments and deals, Bra- zil’s long-term fundamentals – market size, resource endowment and reform agenda – remain strong. As inflation moderates and financing conditions improve, the energy and infrastructure sectors are expected to regain momentum, with continued opportunities for M&A and greenfield development. Macroeconomic Outlook and Its Impact on Brazil’s Energy and Infrastructure Sectors A robust macroeconomic environment encourages both domestic and foreign investment, facilitating large-scale M&A transactions. Brazil’s macroeconom- ic outlook directly shapes the risk appetite, financing conditions, and strategic priorities of investors in the energy and infrastructure sectors. Brazil’s recent years have been marked by moderate but resilient GDP growth (3.4% in 2024, with forecasts of 2.2–2.5% for 2025–26). This steady growth underpins investor confidence and supports demand for new energy and infrastructure projects. Nevertheless, Brazil’s fiscal position remains a con- cern, with high public debt (over 76% of GDP) and lim- ited available funds for direct government investment. This has led to greater reliance on private capital and PPPs to fund infrastructure and energy projects. In addition, Brazil’s monetary policy has been tight, with the SELIC rate peaking at 15% in 2025 to curb infla- tion. High interest rates increase the cost of capital, impacting the financial structuring of energy and infra- structure projects, which are typically capital-intensive and require long-term horizons for return. This envi- ronment can slow down new projects and M&A activ- ity, as sponsors and investors become more selective
and focus on projects with strong fundamentals or government support. The government’s commitment to fiscal consolida- tion and regulatory reforms (such as the new fiscal framework enacted in 2024 and tax reform of 2025) is crucial for maintaining investor confidence and ensuring the sustainability of long-term projects. As inflation is expected to ease and interest rate cuts are anticipated in 2026, financing conditions should gradually improve, potentially unlocking a new wave of investments. Energy Sector as a Dominant Force in Brazil’s M&A Market The energy sector has emerged as a dominant force in Brazil’s M&A market in 2025, accounting for approximately one third of all major transactions and amassing nearly BRL50 billion (USD9 billion) in deal value by mid-September. This performance comes against a backdrop of persistently high interest rates (as explained above), which have generally imposed a more cautious approach among corporate play- ers. Nevertheless, the sector’s unique dynamics and strong long-term fundamentals (abundant resources and global demand for clean energy) have led industry giants to actively review and reshape their portfolios through high-value transactions. According to data from Dealogic, the energy sector represented around 35% of the total financial volume of all M&A transactions in Brazil up to September 2025, out of a total of approximately BRL140 billion (USD26.4 billion). Noteworthy among these was the proposed take-private of Serena by Actis and Sin- gapore’s sovereign wealth fund GIC, valued at over BRL15 billion (USD2.8 billion). This transaction stands as one of the most significant deals in the industry this year. The underlying drivers of this robust M&A activity are multifaceted. The energy sector is experiencing a con- fluence of factors, including the renewal of distribution concessions and the anticipated renewal of contracts for major hydroelectric plants. These developments are compelling companies to recycle assets, thereby creating room in their portfolios for new opportunities. The renewal of distribution concessions has incen-
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