(Recasts with shareholders approving IPO)
SAO PAULO, Aug 31 (Reuters) - Neoenergia SA's shareholders voted on Thursday to take Brazil's No.1 power utility public, setting the stage for what could be Brazil's largest initial public offering (IPO) this year as the company taps growing investor demand for the country's electricity assets.
In a Thursday securities filing, Neoenergia said shareholders led by Spain's Iberdrola SA approved tripling the utility's capital limit to 12.83 billion reais ($4.1 billion) from about 3.5 billion reais currently.
Apart from Iberdrola, which has a 52 percent stake, other shareholders in Neoenergia include pension fund Previ Caixa de Previdência and state-controlled lender Banco do Brasil SA, which own respectively 38 percent and 9 percent of the utility.
The decision is the first step by Rio de Janeiro-based Neoenergia to go public, following the recent acquisition of a smaller rival. Reuters reported on July 14 that the utility's initial public offering could value the company at around 35 billion reais.
Listing Neoenergia, which has the most customers of any Brazilian power utility, would give it access to a wide base of investors seeking greater exposure to an industry that for years has struggled in Brazil with erratic policies, a harsh recession and high borrowing costs. The company's owners are analyzing a dual listing in São Paulo and New York, Reuters reported.
People familiar with the plan told Reuters that Banco do Brasil, the shareholder responsible for selecting the banks for the IPO, has already picked Banco Santander Brasil SA , Morgan Stanley and Credit Suisse Group AG to work on the transaction. Itaú Unibanco Holding SA and Banco Bradesco SA are also trying to join the group.
($1 = 3.1474 reais)
(Reporting by Marcelo Teixeira and Luciano Costa; Writing by Tatiana Bautzer; Editing by Guillermo Parra-Bernal and Bill Rigby)