BRAZIL Trends and Developments Contributed by: José Virgílio Lopes Enei, Mauro Bardawil Penteado, Vitor Fernandes de Araujo and Antonio Paulo Kubli Vieira, Machado Meyer
tivised the rotation of assets. Transmission assets, characterised by stable revenue streams, continue to attract pension funds as natural buyers, especially fol- lowing the construction and initial operation phases by industry groups. Expected industry reforms, with multiple bills of law at different stages of discussion in Congress, have also accelerated deals, with market participants trying to close transactions before new regulation comes into effect. The so-called self-pro- duction ( autoprodução ) arrangements have generated a particularly high level of transactions, as the benefits afforded to these arrangements are under discussion within these bills of law. Despite this overall dynamism, the energy sector is not without its challenges. The renewable energy gen- eration segment is currently facing a crisis of over- supply, with many companies adversely affected by “curtailment” – the forced reduction or interruption of electricity generation imposed by the grid operator. As Brazil’s renewable energy capacity has expanded rap- idly in recent years (particularly in wind and solar), the grid has at times struggled to absorb and distribute all available generation, leading to increased instances of curtailment. This has created significant uncertainty in the pricing of renewable assets, effectively stalling transactions in this segment and resulting in financial losses for affected companies. From an M&A perspective, curtailment introduces significant complexity into the valuation of renewable energy assets. Prospective buyers face heightened uncertainty regarding future cash flows, making it challenging to price assets accurately. These price fluctuations have had a negative effect in energy trad- ing companies in particular, with several under finan- cial distress in 2025. The risk of ongoing or worsening curtailment is also often factored into due diligence and financial modelling, leading to more conservative valuations or, in some cases, the withdrawal of buyers from the process altogether. Until the underlying grid and market issues are addressed, curtailment will like- ly reduce deal flow and asset values in the renewables space, even as the broader energy sector remains a focal point for M&A in Brazil. Looking ahead, the energy sector is poised to remain a pivotal force in Brazilian M&A, driven by ongoing
regulatory developments, asset rotation strategies, increased energy needs for high-end technology (most notably data centres and artificial intelligence) and the continued interest of both domestic and inter- national investors. While challenges persist – particu- larly in the renewables space – the sector’s funda- mental strengths and adaptability ensure its continued prominence in shaping the future of Brazil’s corporate landscape. The government’s focus on decarbonisa- tion and the COP30 summit (November 2025) further enhance the sector’s prospects. Key Role of Global Infrastructure Funds Brazil’s energy and infrastructure M&A cycle continues to attract interest from global funds (including infra- structure funds and sovereign and pension funds) deploying large-scale, long-duration capital. These investors have been comparatively insulated from global volatility due to their long-term mandates and preference for contracted, defensive assets, and they now account for a significant share of deal flow across power, transport, sanitation and digital infrastructure. For example, GIC has been active in energy (take- private of Serena), toll road (acquisition of minority stake in Entrevias) and sanitation (capital contribution in Aegea) sectors. I Squared Capital acquired a 49% equity stake in Órigo Energia in 2024 and is report- edly assessing further opportunities in logistics and digital infrastructure. Macquarie Asset Management has agreed to acquire the toll road platform of Monte Rodovias, its first investment in the sector in Brazil. Macquarie Capital invested in telecom operator Brasil TecPar, while private equity-backed Vero and Ameri- caNet merged to create one of the largest independ- ent internet service providers in the country, under- scoring continued appetite for scalable, data- and connectivity-driven assets. Power transmission and generation also remain key to current M&A activity. CDPQ acquired the transmission assets from Equa- torial, while Global Infrastructure Partners agreed to acquire a 70% stake in Aliança Geração de Energia from Vale. Competitive processes are also increasingly domi- nated by global sponsors with sector specialisation, deep operating benches and flexible capital structures capable of funding both initial acquisitions and multi-
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