Brazilian steelmaker Gerdau secures power supply via investment in Newave

Brazilian steel producer Gerdau SA (BVMF:GGBR4), NW Capital and funds managed by XP Investimentos have agreed to invest up to BRL 4.5 billion (USD 835.5m/EUR 798.5m) in renewable power producer and trader Newave Energia SA.

The funds will be used to support the development of greenfield projects based on solar or wind energy totalling 2.5 GW, as well as of brownfield projects and electricity distribution activities, Gerdau said on Friday.

Through its unit Gerdau Next SA, the steelmaker will acquire a 33.33% stake in Newave and will secure the long-term supply of 30% of the power produced by the latter's projects on a self-production basis. At first, Gerdau Next will subscribe to BRL 500 million worth of stock throughout 2023 and in a second phase will invest up to BRL 1 billion, depending on the achievement of certain milestones.

Meanwhile, NW Capital and the XP funds have committed to invest BRL 1 billion next year and up to BRL 2 billion thereafter in exchange for a 66.67% interest in Newave.

Gerdau noted that the planned solar and wind projects are expected to commence power generation in 2025 and 2026.

The closure of the transactions is subject to receiving approval from antitrust authorities.

(BRL 1.0 = USD 0.186/EUR 0.177)

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