In the spring of 1997, Southern Company had an opportunity to acquire a significant part of the electricity companies in the Brazilian state of Minas Gerais. Shares of utility, CEMIG, were sold by the state government as part of a comprehensive privatization of the electricity sector in Brazil. Privatization in Brazil, in turn, is part of the worldwide movement toward deregulation and privatization of the electricity sector. Like many of its rivals in the municipal sector, the South is committed to a growth strategy, taking advantage of significant opportunities for cross-border investments, which were created by this trend. CEMIG privatization was particularly attractive opportunity for Southern. CEMIG not only one of the largest in Latin America, but these investments provide the basis for the Brazilian market, which is expected to have the greatest potential for growth in the continent. Brazil in the process of reforming the regulatory power and the introduction of competition in the wholesale market, generating Brazil. These changes will further enhance the potential return on investment in CEMIG. In addition to the attractiveness of the investment, the South was able to secure non-recourse financing of half the required amount. Keeping in mind the unstable economic history of Brazil, this funding will significantly limit the risk of falling in the south. The state government has set a price of $ 1.1 billion for the stake. Was investment in CEMIG worth that price? "Hide
by Pankaj Ghemawat, Raymond Hill, L. Thomas Source: HBS 17 pages. Publication Date: December 12, 2006. Prod. #: 707512-PDF-ENG
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