The Brazilian Government plans to host a round of investor meetings to market a broad plan of asset sales, a key initiative to help raise cash and reduce a record budget deficit, a senior official and people familiar with the matter say.
According to Wellington Moreira Franco, the head of a government agency to draw foreign investment to Brazil, a round of so-called roadshows is seen as a necessary step to advertise the assets and the legal and regulatory framework behind the program. He did not give a timetable nor say which assets will be sold.
Still, five sources with knowledge of the plan have told Reuters that Moreira Franco and Foreign Affairs Minister Jos Serra will lead the roadshows in New York, London and other financial hubs. Two of the sources said the presentations are scheduled for mid-July.
The list of ready-for-sale assets is still in the making.
Yet, interim president Michel Temer's government wants to sell majority stakes in the fuel distribution unit of oil producer Petrleo Brasileiro SA, in power utility Furnas Centrais Eltricas SA, and some of the facilities that airport authority Infraero runs, the sources said.
Moreira Franco said the goal is to help create jobs as Brazil wrestles with a two-year recession and slumping commodity prices. Still, the plan could help Brazil raise extra funds to narrow a deficit that most economists forecast to top 10 percent of gross domestic product in 2016.
"It's time to end with the government monologue and start building solutions with our partners," Moreira Franco said late on Friday, adding that the legal and investment framework will be designed in a way that bidders "feel safe and confident".
The state asset sale program offers more evidence of Brazil's policy shift since the Senate's decision earlier in May to try the impeachment of leftist President Dilma Rousseff. Temer, her replacement during the trial and afterwards if she is found guilty, has vowed to streamline Brazil's bloated state and open room for more private investment activity.
It could become Brazil's most ambitious privatisation drive in two decades.
Qatar Investment Authority, Abu Dhabi Investment Co PJSC, and Mubadala Development Co PJSC are among the sovereign wealth funds invited to attend the roadshows, three of the sources said. Canadian investment firms and European infrastructure companies have already been contacted too, the same sources added.
Moreira Franco declined to give an estimate of how much the government could fetch from asset sales, although two of the sources said proceeds could range between US$10 billion and US$20 billion (NZ$14.91 billion-NZ$29.82 billion) over the next two years.
Some of the largest investment banks operating in Brazil will also attend the meetings, many of them representing potential buyers, the sources added.
In a statement to Reuters, Temer's office said the government "plans to transfer to private investors several assets, stakes and companies, although it is still analysing which and which others will remain in the hands of the state".
Spokespeople for Serra's office declined to comment.
Spokespeople for the wealth funds and the Canadian firms including Brookfield Asset Management Inc, did not have an immediate comment.
Reuters
