ISA ENERGIA BRASIL

What it is

ISA Energia Brasil — formerly known as CTEEP — is one of Brazil’s largest electricity transmission companies, operating 35 concessions across 18 states and carrying roughly 30% of all electricity transmitted in the country, with close to 95% coverage in São Paulo state alone.

As of December 31, 2025, it had a total installed transformation capacity of 84,910 MVA and 23,000 kilometres of transmission lines. It does not generate or sell electricity to consumers; it simply owns and maintains the high-voltage highways that move power from producers to distributors, collecting a regulated annual fee set by Brazil’s energy regulator, ANEEL, for each concession.

Between 2022 and 2023, ISA Energia Brasil won five lots in transmission auctions, holding 35 concession contracts, with the longest expiring in September 2053. Long-dated contracts with inflation-linked revenue are what make this business attractive to income-focused investors.

Who owns it

ISA — a Colombian multi-Latin infrastructure group — is the majority shareholder, exercising direct control with 35.82% of total capital. ISA itself belongs to the Ecopetrol Group, a Colombian state-backed multinational energy company.

In effect, the Colombian state sits at the top of this Brazilian utility’s ownership chain.

Among ISA Energia’s other investors is Eletrobras, Brazil’s largest electric energy group; of the company’s shares, around 58% are held by domestic investors and 42% by foreign investors. The publicly traded free float stands at approximately 66.8%.

Who runs it

Rui Chammas is CEO, and Silvia Wada serves as CFO, Investor Relations, and New Business Director. Chammas was confirmed for a further three-year term as CEO in early 2026.

Chammas is an aeronautical infrastructure engineer from ITA; he started his career at Rhodia, working in Brazil and France, then spent 11 years at Braskem as Vice-President, before leading Bioserv (Louis Dreyfus Group) as CEO and then Sterlite Power Brasil. CFO Silvia Diniz Wada holds an economics degree from the University of São Paulo and an MBA in finance from Ibmec, and brings over a decade of M&A experience from Deloitte, Hirashima & Associados and Grupo EDP.

The money, in plain words

Revenue has grown fast — from R$6.2bn (US$1.2 bn) (~$1.2bn) in 2023 to R$9.4bn (US$1.8 bn) (~$1.83bn) in 2025, a gain of 51% in two years (our calculation). The company keeps about 25 cents of profit from every real of revenue — a net profit margin of 24.65%, well above the typical range for regulated utilities anywhere in the world.

For every real that owners have in the business, it returns about 11 cents a year — a return on equity of 11.27%, solid for a capital-intensive infrastructure company. Net debt finished 2025 at R$14.1bn (US$2.7 bn) (~$2.74bn), up 38% in twelve months, driven by a record R$5.1bn (US$990 mn) capital spending year — so leverage is real and rising, though management treats it as deliberate and time-limited.

The shares trade at 9.1 times earnings (price-to-earnings ratio of 9.1×), modest by global infrastructure standards, and delivered a dividend yield of 6.7% in 2025 — EODHD records the current trailing yield at 5.84%. The company maintains a practice of distributing 75% of regulatory net income as dividends, and paid out R$1.2bn (US$233 mn) in total proceeds related to the 2025 fiscal year.

What it is doing now

Between late 2025 and March 2026, it delivered two major projects — Piraquê and Jacarandá — adding R$330m (US$64 mn) (~$64m) in annual regulated revenue; the total investment pipeline now stands at R$12.3bn (US$2.4 bn) (~$2.4bn), of which R$5bn (US$971 mn) is in new-build projects.

In March 2026 the company announced an asset swap with rival Axia Energia: it acquires a 49% stake in IE Madeira and sells its 51% stake in IE Garanhuns for a net payment of R$1.174bn (US$228 mn) (~$228m). The logic is consolidation — swapping minority positions for a more concentrated, strategically valuable portfolio.

In late May 2026, a Brazilian federal court (TRF1) struck down part of a government order relating to the RBSE — a large compensation the regulator pays transmission companies for legacy assets predating 2012 contract renewals — a ruling that directly affects ISA Energia’s future revenues. The decision still admits appeal, but has reignited debate about regulatory predictability and added a risk premium to the shares.

What to watch

• RBSE court ruling: The RBSE is compensation paid to transmitters for assets that pre-date the 2012 concession renewals; the dispute centres on how much of that cost is passed through to consumers via tariffs. Any final ruling that trims future RBSE payments will directly reduce recurring revenue.
• Debt peak and pipeline delivery: Management expects net debt to remain high and still grow over the next two years, with projects due to be fully operational by approximately 2028 — the point at which new concession revenues are meant to turn the leverage tide.
• Auction participation: The 19 lots won by the company in auctions from 2016 to 2023 represent an ANEEL-mandated investment of R$17.1bn (US$3.3 bn) in the national grid. How aggressively it bids in future auctions will determine whether growth continues beyond 2028.
• Dividend practice vs. covenant pressure: Only BNDES financing carries financial covenants, and the company received a waiver against early maturity triggered by 2025 metrics. A tighter covenant environment or a debt-rating action could test the 75% payout practice.

This is news, not investment advice.