Exclusive: Citigroup tops
bank group for Petrobras unit IPO - source
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[August 19, 2017]
By Tatiana Bautzer
SAO PAULO (Reuters) - Citigroup Inc <C.N>
and seven other banks will underwrite the initial public offering of
Petróleo Brasileiro SA's fuel distribution unit, which will likely occur
in November, a person with direct knowledge of the plan said.
Petrobras <PBR.N>, as Brazil's state-controlled oil company is known, is
considering whether to list BR Distribuidora SA in São Paulo and New
York, where a growing number of investors have shown interest on the
transaction, said the person, who spoke on Thursday and asked for
anonymity in order to discuss the plan freely.
Petrobras has stuck with Citigroup's investment banking unit since the
idea of an IPO for BR Distribuidora was first floated early in 2015.
Between 30 and 35 percent of BR Distribuidora could be sold in the IPO
by November, which the person said could be the last "market window" of
In addition to Citigroup, the oil company has now enlisted the
investment-banking units of Bank of America Corp <BAC.N>, Morgan Stanley
& Co <MS.N>, JPMorgan Chase & Co <JPM.N>, Banco do Brasil SA <BBAS3.SA>,
Itaú Unibanco Holding SA <ITUB4.SA>, Banco Bradesco SA <BBDC4.SA> and
Banco Santander Brasil SA <SANB11.SA> as underwriters for the plan, the
Rio de Janeiro-based Petrobras declined to comment. The person declined
to elaborate on the potential size and additional terms of the BR
Media representatives for Morgan Stanley, Bank of America, Itaú,
Bradesco and Banco do Brasil declined to comment. The other banks had no
immediate comment on the IPO.
By lining up a list of top-notch banks for the plan, Petrobras is
signaling that the IPO is key to boosting productivity and diminishing
political meddling in subsidiaries like BR Distribuidora, bankers
recently said. According to one of them, the fate of the IPO hinges on
"a strong underwriter lineup and a clear commitment to stricter
[to top of second column]
Exclusive: Citigroup tops bank group for Petrobras unit IPO - source
Preferred shares of Petrobras <PETR4.SA>, the company's most widely traded class
of stock, accelerated gains on the news and closed 4.2 percent higher on Friday
at 13.60 reais, a two-week high.
By listing BR Distribuidora on more than one exchange, Petrobras could bolster
demand for the stock and give investors greater choice over where they can trade
their shares. The IPO also poses a litmus test for Petrobras, which recently
faced a U.S. government probe linked to a massive corruption scandal in Brazil.
After a series of interruptions in the past two years, Petrobras revived the BR
Distribuidora IPO in June to cut debt and capital spending in low-return
activities. Petrobras is increasingly relying on asset sales and spinoffs to
trim the largest debt burden of any major oil company, at about $95 billion.
BR Distribuidora would be listed in the São Paulo Stock Exchange's Novo Mercado
segment - which has the strictest governance standards and demands a minimum
so-called free float of 25 percent.
Another alternative under discussion is to list the unit in Brazil but allow
international investors to buy the stock through the U.S. Securities and
Exchange Commission's 144A rule, the person said.
The rule allows investments by qualified institutional buyers, which could help
BR Distribuidora tap a category of investors that otherwise may be unwilling to
finance the company through other means, the person said.
(Editing by Guillermo Parra-Bernal and Matthew Lewis)
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