Exclusive: Brazil’s Cemig seeks partner, IPO for two main units

Cia Energética de Minas Gerais SA plans to sell a majority stake in two units and list them in São Paulo and New York in coming months, a move that could help Brazil’s No. 3 power utility reduce debt and curb state interference, a person with direct knowledge of the plan said on Sunday.

The Brazilian state of Minas Gerais, which owns 17 percent of the utility’s capital and controls its management, will announce the plan within the next month once legal and operational requirements have been met, said the person, who asked for anonymity to speak freely about the plan.

The subsidiaries, power generation and transmission company Cemig GT and power distribution firm Cemig D, are fully owned by Cemig, as the utility is commonly known.

Talks with potential partners, which include an undisclosed Brazilian investment bank, a North American investment firm and an Asian power utility, are at an advanced stage, the person said.

Once Minas Gerais state clinches a deal with partners for Cemig GT and Cemig D, both companies will be capitalized and then their initial public offering will be launched, said the person.

Cemig is considering hiring two domestic investment banks and a foreign one to underwrite the IPO, from which the company expects to raise about 4 billion reais ($1.3 billion), the person said.

Proceeds from the IPO will be used to reduce…