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Citigroup tops 8-bank group for Petrobras fuel distribution unit IPO

Between 30-35% of BR Distribuidora could be sold in IPO by Nov, could be last market window of 2017

Reuters  |  Sao Paulo 

A Citigroup office is seen at Canary Wharf in London. Photo: Reuters
A Citigroup office is seen at Canary Wharf in London. Photo: Reuters

Inc and seven other banks will underwrite the initial public offering of Petroleo Brasileiro SA's unit, which will likely occur in November, a person with direct knowledge of the plan said.

Petrobras, as Brazil's state-controlled company is known, is considering whether to list SA in and New York, where a growing number of have shown interest in the transaction, said the person, who spoke on Thursday and asked for anonymity in order to discuss the plan freely.

has stuck with Citigroup's investment banking unit since the idea of an for was first floated early in 2015. Between 30 and 35 per cent of could be sold in the by November, which the person said could be the last "market window" of this year.

In addition to Citigroup, the company has now enlisted the investment-banking units of of America Corp , & Co , & Co , SA , Itau Unibanco Holding SA , Banco Bradesco SA and Banco Santander Brasil SA as underwriters for the plan, the person added.

Rio de Janeiro-based declined to comment. The person declined to elaborate on the potential size and additional terms of the offering.

Media representatives for Morgan Stanley, of America, Itau, Bradesco and declined to comment. The other banks had no immediate comment on the

By lining up a list of top-notch banks for the plan, is signalling that the 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 hinges on "a strong underwriter lineup and a clear commitment to stricter governance."

Dual listing 

Preferred shares of Petrobras, the company's most widely traded class of stock, accelerated on the news and closed 4.2 per cent higher on Friday at 13.60 reais, a two-week high.

By listing on more than one exchange, could bolster demand for the and give greater choice over where they can trade their shares. The also poses a litmus test for Petrobras, which recently faced a US government probe linked to a massive corruption scandal in

After a series of interruptions in the past two years, revived the in June to cut debt and capital spending in low-return activities. is increasingly relying on asset sales and spinoffs to trim the largest debt burden of any major company, at about $95 billion.

would be listed in the Exchange's Novo Mercado segment - which has the strictest governance standards and demands a minimum so-called of 25 per cent.

Another alternative under discussion is to list the unit in but allow to buy the through the US Securities and Exchange Commission's 144A rule, the person said.

The rule allows investments by qualified institutional buyers, which could help tap a category of that otherwise may be unwilling to finance the company through other means, the person said.

 

First Published: Sat, August 19 2017. 09:30 IST
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