The purchase of a 54.64% stake in CPFL for 14.19bn reals will advance the Chinese company’s presence in Brazil, a huge market with some 200mn inhabitants.
The world’s largest utility company and China’s largest state-owned enterprise, State Grid has pursued deals around the world.
Its attempted purchase of an Australian electricity network last year was blocked over national security concerns.
But it boasts other investments in Italy, the Philippines, Portugal and Hong Kong, the company said in a statement.
It entered the Brazilian market in 2010 and already operates transmission lines in the states of Rio de Janeiro and Sao Paulo.
It runs 10,000kms of power transmission lines in Brazil and has another 6,000kms under construction, the company said.
CPFL is the largest private power company in Brazil and the country’s third largest utility provider overall.
It supplies power to 24mn people and is a leading supplier of renewable energy, it said in a statement announcing the deal.
The Chinese firm said it aims to extend its presence in electricity transmission and distribution in Brazil as well as generation from renewable sources.
“The aim of acquiring control of CPFL Energy is to diversify State Grid International’s business portfolio and to use existing synergies between CPFL and its transmission assets to strengthen our leading position in the Brazilian electricity sector,” it said.
The Brazilian company sees the deal as “fundamental” to “continuing its path of growth” and strengthening its own position in the sector, CPFL’s president Andre Dorf said in a separate statement.
The deal offered Brazil a boost as it fights to scramble out of its deepest recession in decades and stabilise the public finances.
“This investment is good for Brazil because the country needs non-speculative foreign capital for infrastructure services like this,” the president of the Electricity Sector Associations Forum, Mario Menel, said.
The Chinese deal gives CPFL an opportunity “to expand, and this can set an example for other Brazilian companies,” he said.
State Grid distributes electricity to nearly a billion people across China through local subsidiaries.
In December, it signed up to build a $1.5bn power line across Pakistan.
It also bought a stake in the Greek operator ADMIE.