BRAZIL Trends and Developments Contributed by: José Virgílio Lopes Enei, Mauro Bardawil Penteado, Vitor Fernandes de Araujo and Antonio Paulo Kubli Vieira, Machado Meyer
curement and grid constraints are central to M&A the- ses, with premium valuations for sites with secured, scalable power and renewable PPAs. Despite tighter global financing conditions, Brazil continues to attract international sponsors, infrastructure funds and stra- tegic operators, with deal making supported by scal- able brownfield assets, visible capex pipelines and increasingly sophisticated financing tools, including offtake agreements in hard currency, mitigating for- eign exchange risks for large global customers. The Rise of R&W Insurance in Brazil In recent years, the Brazilian M&A landscape – par- ticularly within the infrastructure and energy sectors – has witnessed a notable evolution with the increasing adoption of representations and warranties insurance (R&W insurance). While this risk allocation mecha- nism has long been a staple in the United States and Europe, its presence in Brazil has historically lagged, due in part to unique contractual structures, cultural factors and the unpredictability of local jurisprudence. However, 2025 marks a turning point, as R&W insur- ance gains traction and begins to reshape the dynam- ics of energy M&A transactions in the country. A significant development in 2025 is the broadening of coverage. Historically, R&W policies in Brazil excluded certain high-risk areas, such as tax and labour mat- ters. Today, these exclusions are less prevalent, and policies are more comprehensive, aligning with inter- national standards. Premiums, once a barrier to adop- tion, have become increasingly competitive. Given the still-limited local supply, foreign insurers remain prom- inent, especially in cross-border transactions where international placement is more straightforward. For- eign insurers still prefer that the deal parties select New York law or the laws of other foreign jurisdictions to govern transaction documents covered by R&W insurance. R&W insurance offers compelling benefits to both buy- ers and sellers in energy M&A deals. For sellers, the insurance facilitates a “clean exit”, virtually eliminating post-closing liability for undisclosed risks. This struc- ture enables sellers to receive the full purchase price at closing, without the need for holdbacks or escrow
accounts. Private equity funds, in particular, benefit from the ability to wind up investment vehicles and distribute proceeds to investors more rapidly, thereby enhancing returns. Sellers are also empowered to pro- vide broader representations, allowing them to focus negotiations on other contractual aspects. For buyers, the clean exit structure enhances the attractiveness of their offers, providing a competitive edge in auction processes. R&W insurance allows buyers to negoti- ate higher indemnity limits and longer claim periods than would typically be available through traditional escrow or holdback arrangements. The transfer of risk to a specialised insurer can also facilitate agreement on contentious representations that might otherwise jeopardise the deal. The use of R&W insurance is particularly advanta- geous in competitive sale processes. By standard- ising the allocation of post-closing risk, it enhances the comparability of bids, allowing sellers to focus on other material terms. Despite the clear advantages and growing accept- ance, challenges remain for the widespread adoption of R&W insurance in Brazil. Market education, further regulatory clarity and the continued development of local underwriting capacity are necessary for full con- solidation. Nevertheless, the momentum is unmistak- able. R&W insurance is poised to become a standard feature of energy and infrastructure M&A transactions in Brazil, offering a sophisticated tool for risk man- agement and deal facilitation. Market participants and advisers should closely monitor these developments, as they are set to play a pivotal role in shaping the future of the sector. Conclusion Brazil’s energy and infrastructure M&A market contin- ues evolving into a sophisticated, globally integrated environment. Investors and practitioners are deploying advanced transactional tools to navigate complexity, manage risk and unlock value. With a stable regulatory foundation and a clear sustainability agenda, Brazil stands as a key jurisdiction for long-term, value-driven M&A activity.
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