BRASILIA/SAO PAULO: The Brazilian government plans to host a round of investor meetings to market a broad plan of asset sales, a key initiative to help raise cash and cut a record budget deficit, a senior official and people familiar with the matter told Reuters.
According to Wellington Moreira Franco, the head of a government agency to draw foreign investment to Brazil, a round of so-called roadshows will help advertise the assets and the legal and regulatory framework behind the plan. He did not give a timetable nor say which assets will be sold.
The planned sales, which could be Brazil’s most ambitious privatisation drive in two decades, offer more evidence of a policy shift since the Senate’s decision earlier this month to suspend leftist President Dilma Rousseff and try her on charges of breaking budgetary rules.
Five sources with knowledge of the plan told Reuters over the past week that Moreira Franco and Foreign Affairs Minister José Serra will lead the roadshows, which may take place in New York, London and other financial hubs.
Two of the sources said the presentations are scheduled for mid-July.
The list of ready-for-sale assets is still in the making.
Yet, interim President Michel Temer wants to sell majority stakes in the fuel distribution unit of oil producer Petroleo Brasileiro SA Petrobras and in power utility Furnas Centrais Eletricas SA, and in ventures in which airport authority Infraero has minority interests, the sources said.
Moreira Franco said the programme’s goal is to help create jobs as Brazil wrestles with a two-year long recession and slumping commodity prices. Still, the plan could help Brazil raise extra funds to narrow a deficit that most economists forecast to top 10% of gross domestic product this year.
“It’s time to end with the government monologue and start building solutions with our partners,” Moreira Franco said late on Friday, adding that the legal and investment framework will be designed in a way that bidders “feel safe and confident.” Temer, Rousseff’s replacement during the impeachment trial and afterwards if she is found guilty, has vowed to streamline Brazil’s bloated state and open room for more private investment.
Qatar Investment Authority, Abu Dhabi Investment Co PJSC, and Mubadala Development Co PJSC are among the sovereign wealth funds invited to attend the roadshows, three of the sources said. Canadian investment firms and European infrastructure companies have already been contacted too, the sources added.
Moreira Franco declined to give an estimate of how much the government could fetch from asset sales, although two of the sources said proceeds from stake divestitures could range between US$10bil and US$20bil (RM40.9bil and RM81.8bil) over the next two years.
Some of the largest investment banks operating in Brazil will also attend the meetings, many of them representing potential buyers, the sources added.
In a statement to Reuters, Temer’s office said the government “plans to transfer to private investors several assets, stakes and companies, although it is still analysing which and which others will remain in the hands of the state.” Serra’s office declined to comment.
Mubadala is unlikely to attend, a spokesman said.
Spokespeople for QIA and ADIA, as well as the Canadian firms including Brookfield Asset Management Inc, declined to comment. - Reuters
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