Petrobras reaps US$2.3bil in Latin America’s top share sale

SAO PAULO: Brazil’s Petroleo Brasileiro SA is said to have raised about US$2.3bil (RM9.6bil) in the biggest share sale in Latin America so far this year.

Petrobras, as the company is known, shed its remaining stake in fuel distributor Petrobras Distribuidora SA in an offer that priced at 26 reais (US$5.23 or RM21.70) apiece, according to sources.

The sale is part of a broader plan from the oil giant to exit non-core businesses, cut debt and focus on deep-water projects.

The downsizing is also part of the government’s strategy to divest state-run assets.

The drive, one of the main promises of Economy Minister Paulo Guedes when taking office in 2019, has been on hold for most of the past year after the pandemic upended the economy.

The government recently scored a victory after gaining congressional approval to sell utility giant Eletrobras, stoking investor optimism.

The divestment also comes amid a rally in Brazilian assets.

The real is trading near its strongest level in a year, the Ibovespa stock index hit a record earlier this month and the government tapped the international bond market Tuesday.

The South American nation, one of the world’s biggest exporters of raw commodities, is now expected to grow more than 5% in 2021.

Wednesday’s transaction – the biggest in Latin America so far this year – is raising about 11.4 billion reais (RM9.5bil).

The stake, 436, 875, 000 voting shares, is equivalent to 37.5% of the company.

It’s also one of the five-largest secondary offerings in the country since at least 1990, according to data compiled by Bloomberg.

Petrobras didn’t immediately reply to an emailed request looking for comment.

BR Distribuidora declined to comment citing a quiet period. Brazil Journal first reported on the offer’s pricing.

Petrobras started divesting from BR Distribuidora at the company’s initial public offering in 2017.

Two years later, it sold control of the firm in a public equity offering, raking in about US$2.2bil (RM9.14bil) and ending government control over the biggest player in the industry.

Further divestment would bring a significant contribution to Petrobras’s asset-sale program, while also cementing BR Distribuidora’s independence, BofA analyst Frank McGann wrote in a report dated June 13.

BR Distribuidora, which owns over 8, 000 gas stations and more than 1, 000 convenience stores across Brazil, reported gains in the first quarter and has recently embarked on cost cutting measures, including workforce reductions.

Shares are up 21% this year, outperforming the country’s main stock gauge by about 14 percentage points.

The stock is “set to continue to have a good run after the deal is completed, as it removes the overhang that weighed on the shares, ” as well as risks tied to state-controlled firms, Credit Suisse analysts led by Regis Cardoso wrote in a report dated June 29.

Cardoso reaffirmed an outperform rating and boosted his price target to 39 reais (RM32.6) from 32 reais (RM26.8).

Petrobras accelerated efforts to divest non-essential assets under former chief Roberto Castello Branco, who was replaced by former general Joaquim Silva e Luna earlier this year. — Bloomberg

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