SAO PAULO, May 28 (Reuters) - A new fund managed by

private equity firm IG4 Capital is in advanced talks with

creditors of Brazilian renewable power company Rio Alto Energias

Renovaveis to restructure and invest in its

operations, two people familiar with the deal said.

Rio Alto, which builds and runs solar energy projects, has a

portfolio of more than 1.8 GW in assets operating or under

development, but has been struggling to avoid bankruptcy court.

In February, the company requested a legal order temporarily

halting creditor actions, as it seeks to restructure its debt.

Rio Alto and IG4 declined to comment on the matter.

One person familiar with the talks said that if the deal is

completed, it will represent the first investment from IG4's

Fund III, which has already raised some $200 million

in capital.

The deal would involve restructuring about 1.5 billion reais

($260 million) of debt and injecting some 300 million reais of

fresh capital, the person said.

IG4 is not the only potential buyer for Rio Alto, but it is

well-positioned to move ahead with the deal, according to

another person with knowledge of the transaction. The firm was

co-founded by Paulo Mattos, a former GP Investments

executive, who was also a director at Brazilian development bank

BNDES.

($1 = 5.69 Brazilian reais)