Companhia Energetica de Minas Gerais (CEMIG) announced that its affiliate firm Parati S.A. (Participacoes em Ativos de Energia Eletrica) acquired significant interest in Redentor Energia S.A. (Redentor), from Fundo de Investimento em Participacoes PCP, reported Yahoo!.

According to the Yahoo! report, Parati acquired about 58.7 million shares, or 54.08 per cent interest of Redentor for roughly R$403.4 million, or R$6.874712 per share. The move is expected to result in the launch of a public offer by Parati to acquire the remaining shares of Redentor, said Yahoo!

CEMIG is one of the largest integrated electric utilities in Brazil. The company has more than 6,896 megawatts of installed generation capacity, deriving approximately 97% from hydroelectric power.

According to Yahoo, CEMIG stands at a beneficial position to benefit from the economic recovery in Brazil. Demand for electricity in Brazil is on the rise and is expected to increase with the 2014 World Cup in Rio de Janeiro and the 2016 Olympics to be held in the country.

However, over the long term, the company targets to achieve 20 per cent market share in the various segments of the electricity market in Brazil. Investments in fiscal year 2011 and 2012 are anticipated to be approximately R$2.3 billion and R$1.1 billion, respectively, said Yahoo!

But despite these prospects, the company may face hurdles in the form of odd rule from ANEEL and meddling from the state government, said Yahoo! Other than meddling and interference, CEMIG still faces stiff competition in the Brazilian market, in particular from its peer Companhia Paranaense de Energia.

Moreover, the Company’s heavy dependence on natural water resources for top-line growth is risky, indicated the report. Accordingly, analysts expect CEMIG to perform in line with the market going forward and thus maintain a Neutral recommendation on the stock.

Companhia Energetica de Minas Gerais (CEMIG) is a Brazil-based electric utilities company. The Company is engaged in the generation, transmission and distribution of electricity.

The Company is also engaged in other businesses, such as natural gas distribution in Minas Gerais, through its subsidiary, Companhia de Gas de Minas Gerais (Gasmig) and  telecommunications, through Cemig Telecomunicacoes S.A.

CEMIG focuses on providing customers in the industrial, service and commercial sectors with energy solutions.  Companhia Energetica operates implementation and management of systems for electricity sector companies (generation, distribution and transmission), through its subsidiary Axxiom Solucoes Tecnologicas S.A.