Can you give us an overview of the main strategic goals for Actis in Brazil for the coming 12 months?
(i) Maintain operational excellence of our existing 1,100MW operating portfolio of wind power plants in the country; and (ii) Complete construction of another 900MW of wind and solar power plants in northeast and southern Brazil. Plants in construction will bring our total operating portfolio in Brazil to 2,000MW of clean, renewable energy generation assets. These assets are owned by our three investee companies in the country: Atlantic, Echoenergia and Atlas.
What have the major evolutions in your business in the region been over recent years?
Evolutions are changes which can be either positive or negative. Lack of meaningful evolution for the better is perhaps more important. Intrinsic problems have troubled the Brazilian energy sector such as GSF, excessive taxation, difficult project financing environment, insufficient transmission capacity, payment delays, among others. Political uncertainty and lack of fundamental macro reforms exacerbates this risk. Lack of evolution in predictability and stability is a key issue for the sector. As a foreign investor, focused on renewable energy generation, who has been bringing significant sums of USD into the country over the years, to fund construction of our portfolio, FX is one of the largest risks, which is not liable to mitigation. Project financing, another key area, has become an even greater challenge in as much as the local capital markets are incapable of providing the necessary level of debt to fund the energy needs of the country. Energy projects in Brazil and their sponsors remain virtually isolated from access to competitive international sources of project finance, as they are denominated in USD, which increase the FX risk. Increased spot price (PLD) and its higher seasonal volatility are legacies to conservative system planning, which is an area that has significant room for improvement and evolution going forward.
Could you give us some insights as to what international investors interested in Brazil should be aware of?
- Complex taxation,
- The ability to hire well-rounded, experienced senior managers and consultants to run the business in an uncertain, challenging environment.
Where do you see the biggest opportunities for growth within the energy industry in the next 5 years and how are you positioned to support this?
Renewables and transmission. We are well positioned due to our size, strong reputation, focus on the environment, communities and governance and the strength of our experienced cadre of professionals in our investee companies.
What game-changing discovery/ project/ technology is currently making waves?
Energy storage (batteries), solar conversion technologies and the unavoidable increase in electric vehicles.
About Sergio Brandao
Sergio Brandao grew up in the countryside of Brazil, surrounded by rich farmlands and abundant natural beauty – yet with large parts of the population living in sub-standard conditions. Over time, he saw first-hand the awakening of a huge economy and quantum leaps in the areas of education, health, electrification and housing – but with still so much more to be done.
Sergio joined Actis in his home country of Brazil in 2013, where he is responsible for origination and investment management of Actis’ energy investments in Brazil.
Sergio has significant technical, managerial and investing experience gained working and living for nearly two decades around the world. He is driven by fit-for-purpose simplicity of design and implementation, a philosophy that he has seen successfully applied to the development of new businesses, their governance and their monetization in an ever-complex world. Read more about Sergio here