Brazil’s bank Caixa to sell off BRL 7 billion in Petrobras shares

. May 09, 2019
petrobras shares caixa brazil

Since the Michel Temer administration, Caixa (Brazil’s largest exclusively government-owned bank) has gone about cutting costs. Last year, the bank proposed a voluntary redundancy program aiming at BRL 324 million in savings. Now, it has confirmed its much-anticipated plan to sell off shares in Petrobras shares. According to an offering reported to the Securities and Exchange Commission, Caixa wants to raise BRL 7 billion.

</span></p> <p><span style="font-weight: 400;">The 241 million shares to be offered amount to 2.8 percent of Petrobras total capital—and 3.2 percent of the company&#8217;s ordinary shares. It will increase the liquidity of voting capital, which currently has a free-float of only 36.4 percent. </span></p> <p><span style="font-weight: 400;">(Free-float methodology market capitalization is calculated by multiplying the equity&#8217;s price by the number of shares readily available on the market. The bigger the free-float, the less volatile a company&#8217;s stock is.)</span></p> <p><span style="font-weight: 400;">Caixa has <a href="">hired</a> Bank of America-Merrill Lynch, Morgan Stanley, UBS, and XP—with the latter coordinating the retail part of the operation. The stock pricing will be set by the end of the month, but no later than early June.</span></p> <hr /> <p><img loading="lazy" class="alignnone size-full wp-image-17221" src="" alt="petrobras shares caixa brazil" width="1200" height="800" srcset=" 1200w, 300w, 768w, 1024w, 610w" sizes="(max-width: 1200px) 100vw, 1200px" /></p> <hr /> <h2>More divestments</h2> <p><span style="font-weight: 400;">The future Petrobras deal is the second major Caixa divestment under CEO Pedro Guimarães, appointed by President Jair Bolsonaro in January. Last month, Caixa sold off its BRL 2.4 billion equity in insurance firm IRB Brasil Resseguros.</span></p> <p><span style="font-weight: 400;">The bank also wants to make initial public offerings for at least four subsidiaries, in the fields of asset management, credit cards, lotteries, and insurance. At the beginning of the year, the government set out bold plans for all IPOs to happen this year. Experts, however, consider the timetable impossible to fulfill. A more realistic prediction would be two IPOs in 2019.</span></p> <h2>Privatizations not a short-term reality</h2> <p><span style="font-weight: 400;">According to federal <a href="">privatization</a> secretary Salim Mattar, the process of setting up a privatization auction takes between 6 months and a year, in order to comply with federal law. Instead, Mr. Mattar defended a short-term divestment program, with the government reducing its shares in the companies it currently controls. The timetable for such moves is much shorter—from 60 to 90 days.</span></p> <p><span style="font-weight: 400;">The government&#8217;s privatization program includes 105 projects and assets—59 of which were included yesterday. The new list features controversial projects, such as the Angra 3 nuclear plant—which has stalled for years—and the Brazilian Mint. The government expects these 59 new projects to generate BRL 1.6 trillion in investments for the next 30 years. Dozens of roads, railway connections, and airports were also included.

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Gustavo Ribeiro

An award-winning journalist, Gustavo has extensive experience covering Brazilian politics and international affairs. He has been featured across Brazilian and French media outlets and founded The Brazilian Report in 2017. He holds a master’s degree in Political Science and Latin American studies from Panthéon-Sorbonne University in Paris.

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