Companies from China return to investment in Brazil in 2019

31 December 2019

Investments made by Chinese companies in Brazil increased once again in 2019, after a period of cooling in 2018, according to a survey carried out by the PricewaterhouseCoopers (PwC) consultancy at the request of the Brazilian Power360 website.

The survey revealed that Chinese investments this year reached US$1.9 billion, which was far higher than the US$283.8 million invested in 2018, while investment over the last 10 years amounted to US$55 billion in 83 operations.

The majority of the investments made by Chinese companies in Brazil is focused on the areas of energy and infrastructure, as a result of the world power’s strategic interest in expanding operations in Latin America.

The highlight of this year was the deal involving CPFL Brazil, SGPS controlled by Chinese group State Grid, which has invested US$1 billion in a 46.7% share of CPFL Renováveis, the leading company in the sector in the country.

In second place is the China General Nuclear Power Corporation (CGN) which paid US$783 million for the total solar and wind energy assets already in operation of Italian group Enel in Brazil.

Finally, in terms of value, the EDP Group – Energia de Portugal, whose main shareholder is the China Three Gorges group, with 23.27%, which paid US$101 million to buy 100% of Litoral Sul Transmissora de Energia from Chinese company EEC Power and Brazil’s Brafer.

The investment by Chinese companies in Brazil peaked at US$14 billion and 13 operations in 2017, and the following year it fell to just US$300,000 and seven operations.

PwC partner Leonardo Dell’Oso told Power360 that, although Chinese investment in Brazil has fluctuated over the years, the fall recorded in 2018 was particularly big and was due to uncertainty related to the outcome of presidential elections in Brazil, which ended with the victory of candidate Jair Bolsonaro.

During the election campaign, Bolsonaro said the Chinese were “buying Brazil” but after his inauguration “there has been a great effort for diplomatic approach by China, which remained patient,” according to the coordinator of the Brazil-China Studies Nucleus of the Getulio Vargas Foundation, Evandro Menezes de Carvalho.

In October, President Jair Bolsonaro made an official visit to China during which he invited Chinese companies to participate in the auction of the pre-salt layer, which occurred the following month.

Subsequently, the Chinese government announced it had earmarked US$100 billion to finance a new investment programme in Brazil, mainly to build infrastructure. (macauhub)