The Phoenix Fund, controlled by investor Nelson Tanure, requested Cade (Administrative Council for Economic Defense) to enter as an interested third party in the process of evaluating the purchase by Sabesp of 75.8% of the shares of Emae (Empresa Metropolitana de Águas e Energia) held by the fund. He accuses Vórtx and Sabesp of “jumping arms”, that is to say of having started to integrate operations or exchange sensitive information before obtaining final approval from Cade for the transaction.
It was Phoenix FIP that bought Emae during the company’s privatization auction that took place in April last year, in a transaction worth more than a billion reais. To finance the purchase, Tanure’s fund issued debentures, whose trustee was Vórtx and whose creditor fund was Macadâmia FIM, managed by XP, which held the debentures.
However, given the failure to pay interest on these debentures, Vórtx and XP requested an advance on the debt and arranged the sale of the shares held by Phoenix in Emae directly with Sabesp. They also negotiated the purchase of 64.47% of Emae preferred shares held by the former Eletrobras (now Axia Energia) for the São Paulo sanitation company.
Announced on October 5, the agreement was concluded directly between Vórtx, XP and Sabesp, without going through Phoenix. According to a petition filed with Cade, Vórtx exercised influence over Emae “in the face of the mere decision of early debt maturity and despite the possibility of remedy by Phoenix”, by assuming a position of control over Emae’s actions.
“Thanks to the interference, it was able to access sensitive competitive information from Emae. Such actions constitute prior consummation, generating a serious risk for the reversibility of the operation, as well as the risk of affecting the competitive relationship between the parties, which, in itself, is illegal,” Phoenix claims in the petition, which adds that Sabesp is trying to gain undue access to this sensitive information.
The fund also specifies that the acquisition of the Emae preferred shares held by Eletrobras “does not appear to have been notified to Cade”.
When consulted, Sabesp declared that the accusation was false. He said the acquisition of Emae complies with all legal requirements and the company has already provided Cade with the necessary clarifications. Vórtx and XP had no comment.
In response to the accusation, Sabesp told Cade that talk of access to competitively sensitive information is an “impossible scenario,” given that Equatorial Energia, Sabesp’s majority shareholder alongside the São Paulo government, and Emae do not compete in the market, just as Sabesp itself does not compete with Emae.
“Equatorial has investments in solar and wind energy production, in the Northeast subsystem; while Sabesp and Emae have thermal and hydroelectric production projects, respectively, exclusively in the state of São Paulo (SE subsystem),” Sabesp told Cade.
“The hypothetical, generic and very conservative scenario of competition between Equatorial and these companies is so distant and so fragmented that talking about an exchange of information with significant competitive potential becomes, once again, totally unrealistic,” he adds.
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