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Squadra Investimentos increases stake in Brazil’s CESP

Investment funds managed by Squadra Investimentos have increased their participation in São Paulo power generation company CESP, now holding 10.2% of the class B preference shares, according to a CESP release.

Squadra is CESP’s second largest shareholder, behind Votorantim Energia Participações, which holds a 40% controlling stake it acquired from the state government during a privatization auction in 2018. Another important shareholder is Morgan Stanley, which, in August, reached a position corresponding to 6.3% of the class B preference shares.

Bradesco Asset Management, Oceana Investimentos Administradora de Carteira de Valores Mobiliários, Verde Asset Management and TCI Fund Management have also changed their participation in CESP during 2020.

CESP has three hydroelectric power plants in São Paulo state with total installed capacity of 1,654 MW and 948 MWa of physical energy guarantee. The plants are 1,540-MW Porto Primavera in Rosana municipality, 87-MW Paraibuna in Paraíbuna, and 28-MW Jaguari in São José dos Campos.

In January, the company began the operations of CESP Comercializadora, with a goal to optimize management of CESP’s energy balance, better manage hydrological risks and perfect the commercial strategy.

CESP’s sale contracts in the free power market were mostly signed between 2003 and 2015. Some contain a flexibility clause, with minimum and maximum limits applied to the monthly seasonalized volumes and the year’s consolidated volume. The average price of the free market contracts (industrial, traders and generators) in the second quarter was up 5% year on year.

The company’s contracts in the regulated market began in 2009 and 2010 and are valid through 2038 and 2039, totaling 230 MWa. The average sale price in this market between April and June was up 3% compared with the same period in 2019.