Why Did China Grossly Overpay For A Utility In Brazil?

11 Jul 2016   Brazil, China

China Utlilties Chinese state energy companies are huge by international standards. Their government wants them to ex-pand overseas and they seem indifferent to conventional standards of profitability. This makes them for-midable competitors. And the fact that they can borrow from government-owned banks at attractive in-terest rates lessen their competitive advantage. The State Grid of China, for instance, has $466 billion in assets (yes, we checked that number to make sure we had the decimal in the right place). By comparison one of the U.S.’s largest utilities, Southern Company, has “only” $78 billion of assets. China’s State Grid just made a bid to buy a controlling position in one of Brazil’s biggest electric companies, CPFL Energia, with the bulk of its assets in the industrial state of São Paulo. The offer itself is not the big news. This Chinese firm already owns transmission assets in Brazil. Nor should it be […]

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