Completed Commercial AidData Chinese Aid

China Eximbank provides M&A loan for CTG’s acquisition of Duke Energy’s Brazilian business

$662.9K USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	China Three Gorges (Luxembourg) Energy S.A.R.L.
Country	Brazil
Start Date	Oct 10, 2016
End Date	Oct 11, 2028
Duration	4,384 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`105886`

Grant Description

China Eximbank provides M&A loan for CTG’s acquisition of Duke Energy’s Brazilian business On October 10, 2016, Duke Energy International Group S.a.r.l., X Duke Energy International Brazil Holdings S.a.r.l., and China Three Gorges (Luxembourg) Energy S.a.r.l. signed a purchase and sale agreement.

Under the terms of the agreement, Duke Energy International Group S.a.r.l. agreed to sell all of its equity interests in Duke Energy International Brazil Holdings S.à r.l. -- its Brazilian subsidiary that owned 2,090 megawatts of hydroelectric generation capacity in Brazil, including eight hydroelectric plants with 2,057 megawatts of capacity on the border between the states of Sao Paulo and Parana and two small hydroelectric plants (each with a capacity of 17 megawatts) on the Sapucai Mirim River, in the northern part of the Sao Paulo state — to a Luxembourg-incorporated subsidiary of China Three Gorges Corporation (CTG) known as China Three Gorges (Luxembourg) Energy S.à.r.l.

In order to facilitate the $947 million acquisition, China Eximbank provided an M&A (overseas investment) loan to China Three Gorges (Luxembourg) Energy S.à.r.l.

The acquisition, which was completed on December 29, 2016, gave CTG control of 8 hydropower plants on the Paranapanema River: UHE Capivara, UHE Chavantes, UHE Jurumirim, UHE Salto Grande, UHE Taquaruçu, UHE Rosana, and 49.7% of the Canoas complex, formed by UHE Canoas I and UHE Canoas II, a consortium jointly operated with Companhia Brasileira de Aluminio (CB).

It also gave CTG control of 2 hydropower plants on the Sapucaí-Mirim river: PCH Retiro and PCH Palmeiras.

Then, in February 2017, the Sino-Latin American Production Capacity Cooperation Investment Fund (also referred to as the China-LAC Industrial Cooperation Investment Fund and abbreviated as Claifund) acquired a 33% equity stake in Duke Energy International Brazil Holdings S.a.r.l. from China Three Gorges (Luxembourg) Energy S.à.r.l. for $315 million.

📋 Staff Comments

The Chinese project title is 购杜克能源公司巴西资产的项目 or 收购杜克能源巴西水电资产 or 帕河项目 or 的巴西杜克能源项目.
The face value of the China Eximbank loan is unknown. However, given that the total cost of the acquisition was $947 million and most China Eximbank M&A (overseas investment) loans cover at least 70% of the total cost of the acquisition, AidData assumes for the time being that the face value of the China Eximbank loan was roughly equivalent to $662.9 million. This issue warrants further investigation. See slide 13 of https://www.dropbox.com/scl/fi/l59pewju61dhll79k8msy/2.EXIM-Bank.pptx?rlkey=4ffouewoknm33jnz3dykii2i4&dl=0 for more information on the standard terms and conditions that govern M&A (overseas investment) loans from China Eximbank.
Some sources suggest that China Three Gorges (Luxembourg) Energy S.A.R.L. acquired a 100% equity stake in Duke Energy’s Brazilian business (Duke Energy International Brazil Holdings. S.a.r.l.) for $1.2 billion. Others suggests the acquisition cost was $947 million or $950 million. AidData relies on the most conservative estimate for the time being. However, this issue warrants further investigation.
Claifund is a multilateral cooperation fund established by the Chinese government to support investments by Chinese companies in Latin America. It is one of two multilateral cooperation funds created by the Chinese government to advance the economic relationship between China and Latin America. The first phase of capital for the fund was in the amount of $10 billion. The capital contribution came from three Chinese government entities: the People's Bank of China, the State Administration of Foreign Exchange, and the China Development Bank. Part of the initial capital came from the foreign exchange reserves of China.

📚 Sources & References

CTG 2022 - Prelim OC
China Eximbank Signed a Strategic Cooperation Agreement with China Three Gorges Corporation
Han Lijie
中国长江三峡集团有限公司 2023 年面向专业投资者公开发行绿色企业债券（第一期）募集说明书
Form 8-K Current Report
Purchase and Sale Agreement by and among Duke Energy International Group S.A.R.L.
Duke Energy INternational Brazil Holdings S.A.R.L. and China Three Gorges (Luxembourg) Energy S.A.R.L.
中国长江三峡集团有限公司2022 年度第六期绿色中期票据募集说明书
Lijie Han
Lijie Han
China Three Gorges Corporation $1.2 billion acquisition of Duke Energy Brazilian assets
Project Finance Boom in renewables 2017
Skadden
TozziniFreire and White & Case instructed on Duke Energy asset sale in Brazil
Energy M&A trend: minority interest sales in regulated utility subsidiaries to raise equity capital
BNDES
Caixa to manage Brazil-China infrastructure fund
Clai Fund $315 million acquisition of 33% Duke Energy International Brazil Holdings
进出口银行与中国长江三峡集团公司签署战略合作协议
Duke Energy completes exit of international business in deals valued at $2.4 billion
Duke Energy completes sale of international business in Brazil
FERC Financial Report
Duke Energy International Geracao Paranapanema S.A.
CTG Brasil turns 10 years old Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.

All Grantees

China Three Gorges (Luxembourg) Energy S.A.R.L.

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