China State Grid enters Brazil in $1.8bn CPFL deal

China’s State Grid has bought a 23.6 percent stake in Brazil’s largest private power company in a deal worth BRL 5.8 billion ($1.8 billion; €1.6 billion).

The Chinese company has bought 234,086,204 shares in CPFL at a purchase price of BRL 25 per share. The shares were acquired from Brazilian conglomerate Camargo Corrêa and energy firm ESC Energia.

China State Grid said it hopes the deal will deepen economic and trade cooperation between the two countries, adding that it would seek to make further inroads in Brazil’s electricity sector.

The deal, which awaits regulatory approval, is a major breakthrough for China State Grid in its bid to have 20 percent of its assets invested outside China by 2020.

Last month, its A$14 billion ($10.8 billion; €9.7 billion) bid for the 99-year lease of Ausgrid, Australia’s largest electricity network, was rejected by the government on the grounds that is was “contrary to the national interest”. Similar concerns remain in the UK where Theresa May’s new government has postponed a final decision on a potential Chinese investment in the £18 billion ($24 billion; €21.5 billion) Hinkley C nuclear plant.

However, with Brazil in the throes of deep recession and its new government keen to attract investment after the impeachment of former president Dilma Rousseff, China State Grid may have finally found a willing partner.