Warburg Pincus funds Brazilian energy firm

Warburg Pincus has led an investment of R$350m ($201m) in Omega Energia, a Brazilian Energy firm. Omega, which was formed in 2008, is involved in buying small hydro power plants. Warburg worked in conjunction with Tarpon Investimentos, the current controlling shareholder of the company.


Belo Horizonte, Brazil, September 22 , 2010 – Omega Energia announced today that it has entered into an investment agreement with Warburg Pincus, a leading global private equity firm, and Tarpon Investimentos, in order to fund the fast-paced growth of the Brazilian firm.

The new investment of up to R$350mm is anchored by Warburg Pincus and Tarpon, the current controlling shareholder of the company. The investment aims to transform Omega into one of the leading renewable energy platforms in the country. “We are excited about this investment, which is our first in Brazil since the opening of our São Paulo office in February of this year. We look forward to partnering with the management team at Omega, and our co-investors Tarpon, as the Company continues to grow and expand its clean energy capabilities,” commented Alain Belda, Managing Partner of Warburg Pincus in Brazil. Omega’s chairman Wilson Brumer, believes that governance and sustainability were key to attracting Warburg Pincus. “We’ve been extremely diligent and disciplined in adopting best standards of governance and sustainability since inception and I’m sure that Warburg Pincus considered those factors when selecting our firm as their first investment in Brazil”.

Since its inception in April 2008, Omega has developed an extensive SHP (Small Hydro Power Plant) project portfolio and is continuously seeking new opportunities. “We have a strong conviction regarding the virtues of SHPs, and we are always searching for projects with solid technical fundamentals. We want to grow, and support consolidation within the clean and sustainable energy sector, for clean energy is an extremely relevant, effective and long-lasting solution to Brazil’s energy supply needs”, stated Antonio Augusto Bastos Filho, Omega’s CEO. When questioned about using other renewable energy sources, Antonio commented: “We are already conducting feasibility studies for those larger hydro power plants, between 50 and 200 MW, that maintain high sustainability standards, as we believe that new independent projects in excess of 1,000 MW will become more difficult to source and implement. We are also analyzing opportunities in wind energy as well as biothermal energy (fueled by sugar cane) since these are excellent substitutes for traditional energy sources that create a larger CO2 foot print.

Up until now, Omega has been investing in and developing SHP projects in Minas Gerais as well as in other states in the South, Center-West and North regions of Brazil. These projects are in different development stages, ranging from engineering studies and licensing, to construction and operations, totaling almost 1,200MW. Pipoca Power Plant (20 MW) located in Minas Gerais completed construction recently and there are two other SHPs in construction phase in the state of Mato Grosso, with a total installed capacity of 32.5 MW. Regarding market consolidation, Mr. Bastos believes that “given the extremely large amount of resources required, energy is by nature a partnership business. I strongly believe that the growth of the renewable energy sector is happening due to the creation of larger enterprises with greater economies of scale and, most importantly, through the partnerships of the main entrepreneurs in the sector.”

He continues, “Omega was born through the association of some of the largest developers of renewable energy projects in the country who contributed with both knowhow and financial resources. Today, we can say that our partnerships have been very successful.” Omega has stakes in several projects and in many cases it shares the control with other groups, thus achieving management synergies, while spreading costs, risks and investments.

Omega believes that the country should follow its natural vocation and invest in clean, modern and sustainable energy sources. “We strongly believe that renewable energy sources are the present and future, both from an environmental and an economic perspective. Brazil has the unique combination of three very abundant and attractive clean energy sources – hydro, wind and biomass.” concludes Mr. Bastos.

About Tarpon Investimentos

Tarpon is a Brazilian value-oriented asset manager dedicated to equity investments in both public and private equity. Currently, Tarpon has US$3 billion in assets under management from international institutional investors, mainly endowments, foundations, pension funds, sovereign funds and family offices. For more information, please visit www.tarponinvest.com.br.

About Warburg Pincus

Warburg Pincus is a leading global private equity firm. The firm has more than $30 billion in assets under management. Its active portfolio of more than 110 companies is highly diversified by stage, sector and geography. Warburg Pincus is a growth investor and an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 13 private equity funds which have invested more than $35 billion in over 600 companies in more than 30 countries. The firm has offices in Beijing, Frankfurt, Hong Kong, London, Mumbai, New York, San Francisco, São Paulo and Shanghai. For more information, please visitwww.warburgpincus.com