BRASÍLIA: Drive down any highway in Brazil and it is impossible to avoid the square green-and-gold signs bearing the initials “BR” that announce Petrobras petrol stations. With 7,500 roadside outlets, the state-owned oil company remains one of the country’s most recognised brand names. But soon, its petrol distribution network — the biggest in Brazil — will have a new private-sector owner. Petrobras is selling the business to help cut its crippling debt, as it tries to recover from a sweeping corruption scandal. Media reports suggest it is seeking a price of R$30bn-R$40bn ($9bn-$13bn).
And its upcoming sale is adding to a growing wave of corporate mergers and acquisitions — a trend that, coupled with a strong rally in capital markets, is raising hopes of an upturn for Brazil’s long-suffering investment banks. “We are seeing transactions across all industries, with a lot of interest from foreign players,” says Alessandro Farkuh, head of M&A at Bradesco BBI, an arm of the country’s second largest private bank. However, whether this activity becomes a sustained M&A revival will depend on the success of Brazil’s new political and economic reforms as well as Petrobras’s short-term asset sale programme.
Renewed interest in Brazilian companies has come as hopes rise that the impeachment of the leftist former president Dilma Rousseff in August leads to an escape from a deep economic recession. Her more business-friendly replacement, Michel Temer, has already introduced fiscal reforms, which have helped both the benchmark Ibovespa share index surge 44 per cent this year and lift the Brazilian real 22 per cent against the dollar.
