Strategy and Competitive Advantages

Equatorial intends to expand its current operations through the acquisition of total or joint controlling stake of companies within the electric sector, being distribution, transmission or generation segments. The Company’s target comprises the entire country.

The Company has a strong culture of ownership due to an alignment of incentives for middle and senior management. A large part of these executives’ compensation is related to long-term incentives, matching and phantom shares that are related to the Company’s long-term value generation. Additionally, the variable compensation practiced by the Company is higher than that of other companies in the electricity sector and covers the entire workforce of the group.

The Company evaluates conducts its budgeting process in a judicious manner, seeking to define the investments to be made in organic growth, taking into account the return on projects and building an annual zero-based costing budget. The target system is widely discussed throughout the organization with clear guidelines for setting targets linked to results.

Equatorial has the expertise to transform assets stressed in benchmarks into operational and financial excellence.

The Company has a conservative financial management, seeking to work with leverage levels well below the financial agreement to enable inorganic growth, it also has access to several sources of funding, such as: formento bank, capital market and commercial banks. Equatorial is a corporation and has one of the highest liquidity in the industry.

Equatorial Energia’s main strategy consists of expanding its operations in the energy distribution segment in Brazil, through the acquisition of independent or shared control of companies. The group targets acquisitions with extreme financial discipline, based on the search for a level of return that is consistent with the risks assumed in the business in question.

In our vision of the future, we are expanding the territories and segments in which we operate. The main levers for value generation are the strong potential for growth in the coming years, the experience in utilities to diversify operations, the culture of operational efficiency and the management model and, finally, the social transformation that we can promote in life of the people impacted by Grupo Equatorial’s businesses.

Sectoral diversification is part of the Company’s strategy, and in 2021, Grupo Equatorial started a new chapter in its trajectory with the entry into the sanitation sector. By acting on this new front, the Group has advanced and has become a multi-utility company.

In 2022, Equatorial took an important step towards diversification, concluding the acquisition of Echoenergia. With the acquisition, it expanded its operations in the Brazilian electricity sector by opening a new avenue of growth, this time through investment in renewable energy. With the investment in renewables, Equatorial diversified its business and positioned itself to be one of the major integrated players in the sector, in an essential strategy in view of the expansion of the Free Energy Market in the coming years and the transformations that the sector is experiencing.