Petrobras plans to sell up to 30% of its stake in BR Distribuidora, the country’s largest fuel distribution company. The oil company is in advanced talks with banks and financial investors to divest its share by issuing shares (known as “follow on”) at the São Paulo stock exchange. With the deal, the state company would reduce its share of the current 70% to 40% of the company, according to sources familiar with the matter.
Valued at R $ 27.3 billion, Petrobras’ stake in BR Distribuidora is equivalent to approximately R $ 20 billion. The expectation is to raise around R $ 8 billion with the operation. Due to the size of the offer, the company is looking for an investor to anchor the purchase of shares in the market. The American BlackRock fund was named as one of the potential financial investors in this operation. That is, it would guarantee the purchase of the BR Distribuidora’s stock offer.
According to these sources, the announcement of the operation to the market can be made in the coming weeks with conclusion of the business still this semester. At the moment, the state-owned company is aligning sales modeling with regulatory agencies and the Federal Audit Court (TCU) to avoid any last-minute surprises. Last year, the court suspended the sale of the TAG gas pipeline, which was only resumed this year after the Federal Supreme Court (STF) approved the operation. But as BR is already listed on the stock exchange, sources believe that there will be no problem.
In December 2017, BR Distribuidora made the largest market operation by raising R $ 5 billion in the IPO (IPO). The operation was considered the largest since 2013, when BB Seguridade raised R $ 11 billion.
A leader in fuel distribution in Brazil, BR Distribuidora ended last year with a net revenue of R $ 97.7 billion, an increase of 15.6% over 2017. The company’s net income was R $ 3.2 billion in period. Sought out, Petrobrás, BR Distribuidora and BlackRock did not comment on the matter.
The sale of Petrobrás’ stake in the fuel distributor is part of a broad development plan begun under the management of executive Pedro Parente to reduce the company’s debts. The goal is to get rid of about $ 27 billion by 2022.
This year, Petrobras took an important step in completing the sale of TAG (North and Northeastern gas pipeline) to Engie for US $ 8.6 billion – the largest sale in the history of Petrobrás, according to market sources. The state company had already sold the NTS pipeline (from the Southeast region) to a consortium led by Canadian manager Brookfield for $ 4.2 billion ($ 16 billion).
The oil company also restarted the sale of Liquigás – distributor of gas cylinders. This asset had already been sold to the Ultra group, but the operation was barred by the Administrative Council of Economic Defense (Cade). At the time, Ultra disbursed R $ 2.8 billion to take the company. Sources say that in this case, the expectation is to complete a sale in the third quarter of this year.
There is also a list of assets that is in the sales basket of the oil company. Among them, the participation in Braskem, a petrochemical company, which has Odebrecht as another important shareholder of the business. The transaction is being negotiated with the Dutch company LyondellBasell and can be concluded later this semester.
Petrobras is preparing to sell three more gas pipelines after raising $ 8.6 billion with the transfer of control of the TAG to the French company Engie, three sources familiar with the matter said.
The set of pipelines, considerably smaller than those of TAG, can be valued at more than $ 3 billion, according to one source. Petrobras has hired a unit of investment bank Credit Suisse to sell the assets, which connect the pre-salt area in the Santos Basin to the terrestrial infrastructure.
Initial plans foresee the sale of only a minority share of the three gas pipelines, but after obtaining more resources from the sale of the TAG than expected, the oil company already considers selling the control of those assets, two sources said, asking not to have their names revealed because the discussions are private.
The final decision will be taken after the new appointed financial director, Andrea Marques de Almeida, takes office.
Known as Route 1, Route 2 and Route 3, the three units are about 1 thousand kilometers long that depart from the Santos Basin to the coast.
Prior to the sale of TAG, Petrobras had already sold 90% of the New Sodium Carrier pipeline unit (NTS) for more than $ 5 billion in 2016 for a consortium led by Canada’s Brookfield.
Two of these pipelines already carry natural gas generated in the exploration of the pre-salt fields in the Santos Basin to the coast of Rio de Janeiro and São Paulo. A third is still under construction.
The rationale for selling a majority stake in gas pipelines is to attract more interested parties than a minority alienation, one source said. Some of the investors who participated in the TAG sale process are also interested in these pipelines, which offer a stable source of cash flow.
The sale process should not start before the second half because Petrobras needs the endorsement of its exploration partners in the pre-salt for the transaction, since they have a stake in the exploitation of the gas produced by the fields. These partners include France’s Total, Shell and China’s CNPC, among others. Petrobras and Credit Suisse did not comment on the matter.