CPFLR is a company focused on the development, construction and operation of Renewable energy projects in Brazil. Its areas of operations include wind, small hydro (less than 30 MWs of installed capacity) and biomass projects. Going forward it also plans to expand into solar as this becomes viable in Brazil. CPFLR was formed in August 2011 when CPFL Energia (“CPFL”) merged its Renewable energy projects into Empresa de Investimento em Energias Renováveis S.A (ERSA) a fast growing Renewable energy company in Brazil. Since the merger, CPFLR has been growing its operations and has 1.15 GW of operating capacity (556 MW in wind, 326 MW in SHP and 270 MW in biomass) and 582 MWs under construction, besides a strong pipeline of 3.8 GWs of projects under development. This makes it the leading player in the Renewable energy market in Brazil.

Prior to the listing, CPFL Energia held 63 percent stake in CPFLR through its fully-owned subsidiary (“CPFL Geração”). CPFL is the largest private group of the power sector in Brazil, being the leader in energy distribution and commercialization, and the third largest utility in the Country. It operates in both the regulated and the free markets. CPFL is listed in BOVESPA’s Novo Mercado and the New York Stock Exchange “NYSE” (through ADR III). In 2013, CPFL Energia completed eight years of its dual IPO and participation in BOVESPA’s Sustainability Index (“ISE”).

Other shareholders holding 37 percent in CPFLR prior to the listing were the original shareholders in ERSA. These included:

Pátria Energia Fundo de Investimento em Participações (9.43 percent ownership), a close-end fund managed by Pátria Investimentos S.A. (collectively “Pátria”), a private equity and investment bank in Brazil, with over twenty years of experience in the local market. The fund was created to invest exclusively in ERSA. IFC and Pátria have an established relationship in the Health and Education sector, having co-invested in Anhanguera Fundo de Educação Brasil, which received IFC’s Client Leadership Award in 2009;

Secor LLC (9.24 percent ownership), a private equity investment vehicle fully owned by Eton Park Capital Management LP (collectively “Eton Park”), a global investment firm with experience in emerging markets, mainly in Latin America and in the energy sector;

BBI Fundo de Investimento em Participações Multisetorial Plus (4.99 percent ownership), a private fund owned and managed by Banco Bradesco S.A. (collectively “Bradesco”), Brazil’s second largest private bank;

Deutsche Investitions und Entwicklungsgesellschaft mbH (“DEG”) (2.48 percent ownership), a member of KfW Bankengruppe, controlled by the Federal Republic of Germany in conjunction with the Federated States of Germany;

FIP Brasil Energia (7.63 percent ownership), a private equity fund owned and managed by BTG Pactual (“BTG”) an investment bank from Brazil; and

GMR Empreendimentos Energéticos Ltda (“GMR”) (3.23 percent ownership), a family-owned company with investments in real estate, forestry and energy. Before becoming a shareholder, GMR was engaged by ERSA as an operating partner, due to its experience in designing, building and operating SHPs. This stake is held between GMR (2.23 percent) and its founder Mr. Roberto Sahade (1 percent).

Project involves construction of renewable energy projects of 530 MWs in Brazil by 2018. Split as 60 MWs of small hydro and 470 MWs of wind projects. The total Project cost for the 530 MW to be constructed by 2018 is estimated at R$2.54 billion (US$1.25 billion) comprising an estimated R$760 million (US$375 million) of equity and R$1.77 billion (US$875 million of debt). The equity financing plan envisages approximately R$600 million (US$295 million) of equity expected to be raised in the IPO. The remaining equity requirement will be met through internal cash generation from operations. The debt for the Project will be raised for each individual project separately.

IFC has invested in common shares which are tradable on the Bovespa stock exchange. IFC shareholding comprises about 2.7 percent of CPFLR’s ownership.

71.08 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	71.08

* These investment figures are indicative

The Project comprises of several projects spread in different parts of Brazil, including in frontier areas of Northeast Brazil.

(i) Increased generation of Renewable power: The GOB has set a target to increase the share of power generation attributed to Renewable energy sources in Brazil to 20 percent from current 12 percent of installed capacity. The Project is expected to help Brazil meet this target.

(ii) Contribution to Climate Change Mitigation: The Project helps mitigate adverse climate change impacts by helping Brazil achieve a balanced energy mix through the use of Renewable resources. With current operational projects and projects under development, the Company is expected to avoid approximately 700 thousand tons of CO2 emission annually by FY2018.

(iii) Employment: The Project will generate additional local employment during construction (largely in Northeast Brazil) and permanent employment during operations.

(iv) Private Sector Development in Renewable Energy: IFC''s investment is expected to help attract international investors to Renewable energy projects in Brazil which will facilitate the growth of private companies in this sector in Brazil.

(i) provide confidence and a "stamp of approval" to potential investors by serving as an anchor to support CPFLR''s equity fundraising plan under current difficult public equity market conditions;
(ii) leverage IFC''s understanding of Renewable energy globally thereby helping CPFLR scale up in its Renewable energy business; and
(iii) further strengthen the Company''s environmental, social and corporate governance policies/practices.

The project is categorized A according to IFC’s Environmental and Social categorization process as its consists of an equity investment in a company focused on the development of small hydroelectric power, biomass thermal power as well as wind power projects. Although in the development process, the company screens potential project locations for numerous criteria to minimize E&S risks, which include avoidance of legally protected areas and indigenous peoples’ lands, some individual projects from existing portfolio or future developments can have impacts consistent with a category A project.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.