XP brokerage eyes creation of power trading unit in Brazil this year

SAO PAULO, March 24 (Reuters) - Brazilian financial services platform XP Inc will launch a power trading unit later this year, aiming to turn itself into a leading name in the domestic unregulated power market over the next few years, an executive told Reuters on Wednesday.

XP’s power-trading arm would take advantage of the company´s vast portfolio of corporate clients while seeking to invest in technology as a way to have an edge over rivals, the unit’s chief Cristian Nogueira said.

The unregulated power market, which allows companies that consume power to negotiate contracts and prices with suppliers, has been growing quickly in Brazil due to rising rates from electricity utilities.

Banks such as BTG Pactual , Itaú Unibanco, Santander Brasil and Australia´s Macquarie have already created power trading units in Latin America’s biggest country. Energy companies, including local branches of European utilities Enel, Engie, EDP and Iberdrola, are also in the market.

“XP is used to improving people’s lives by offering innovative products and education. With energy you can do the same. We will do it initially using our broad network of customers,” Nogueira said.

“We habitually offer our customers several hedging options: hedge for exchange rates, interest rates, inflation. Electricity will be another product.”

The executive said that XP could be trading yearly energy contracts equal to 3 billion reais ($530 million) in the next two or three years.

“We have a goal, a big and ambitious dream. That in three years, anyone thinking about power trading in Brazil will have XP as a reference,” Nogueira added. ($1 = 5.6211 reais) (Reporting by Luciano Costa; Editing by Cynthia Osterman)