Yahoo Finance Petrobras (PBR) Seeks IPO Approval for Fuel Distribution Arm
Petróleo Brasileiro S.A. or Petrobras PBR recently filed for an IPO for its fuel distribution subsidiary Petrobras Distribuidora S.A. The Brazilian energy giant intends to raise around $2.3 billion or $7.5 billion reais at the high end of the price range of 15 reais-19 reais per share. Petrobras is expected to offer between 25% and 40% of its stake in BR Distribuidora. Petrobras seeks a valuation of up to $6.8 billion for its fuel distribution arm which operates over 8,000 gas stations, 91 fuel storage bases, 15 lubricant deposits and 109 fuel stations in airports.
Major financial service provider Citigroup Inc. is likely to be the lead underwriter of the offering along with seven other banks. Further, Petrobras Distribuidora is later likely to merge with another subsidiary of Petrobras — Downstream Participações Ltda.
Petrobras Distribuidora has been planning to go public since 2015. However, the company’s plans have been stalled due to the heavy burden of the invoice receipts that Eletrobras owes it for fuel sales. Petrobras renewed the IPO plans in June and has been concentrating on lowering debts and capital spending.In August, Petrobras invested $2 billion or $6.5 billion reais into its fuel distribution subsidiary to strengthen the balance sheet of the latter, thus enabling it to attract investors for the IPO. The move came after the Brazilian government proposed to sell the controlling stake Eletrobras to balance the budget deficit and promote competition and efficiency to the business.
Headquartered in Rio de Janeiro, Petrobras is the largest Latin American oil and gas integrated company. It is involved in the exploration, production, refining, retailing and transportation of petroleum and its byproducts, both domestically and internationally. Petrobras which aims to revive its financial health through divestments and spin offs, intends to divest around 30 assets by the end of the year. This will also help the company gain additional liquidity as it intends to increase investment in ultra deepwater projects. The company is also entering into various strategic partnerships with foreign oil giants to drive exploration momentum. In this regard, Petrobras has inked deals with major players like TOTAL S.A. TOT, Royal Dutch Shell plc RDS.A and Statoil ASA STO .
Petrobras currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
Petroleo Brasileiro S.A.- Petrobras Price
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