February 14, 2018, by Tatiana Bautzer, Carolina Mandl
SAO PAULO (Reuters) – Brazilian state-controlled oil company Petroleo Brasileiro SA has set a late-March deadline to receive binding proposals for a controlling stake in gas pipeline network Transportadora Associada de Gás (TAG), three people with knowledge of the matter said.
Consortia led by Australia’s Macquarie Group Ltd, French utility Engie SA and United Arab Emirates’ sovereign wealth fund Mubadala Development Co are preparing their offers, the sources added, asking for anonymity because talks are private.
The three groups delivered non-binding proposals in December for a 90 percent stake in the pipeline network, Reuters reported.
The consortia are in talks with banks to discuss financing, the sources added, saying that consortia bids may be north of $7 billion, which would make TAG one of the largest divestments by Petrobras, as the state-controlled company is known.
Petrobras, Engie and Mubadala did not immediately comment on the matter. Macquarie declined to comment.
Petrobras has committed to a $21 billion two-year divestment plan to reduce its debt, which at $91 billion is the largest among oil majors, according to Thomson Reuters data.
TAG owns 4,500 kilometers (2,800 miles) of pipelines in northeast Brazil.
To comply with Brazil’s audit court rules, Petrobras may choose up to two of the three bidders for a final round if the leading proposals are very close in value or choose a winner immediately, the sources added.
The consortia may not change their components before the final bidding round, according to the sources.
Macquarie, the world’s largest manager of infrastructure funds, has partnered with Canada Pension Plan Investment Board, known as CPPIB, Singapore’s sovereign wealth fund GIC Pte Ltd and two Brazilian investment firms.
Mubadala has partnered with EIG Global Energy Partners LLC. It is unclear whether French energy firm Engie has partners.
Banks have been eager to finance the bids, one of the sources added, considering Brazilian interest rates at record lows and the very stable nature of the gas pipeline network.
Banks are also optimistic on growth prospects after first results obtained by Canada’s Brookfield Asset Management Inc, leader of a group that paid $5.2 billion last year for another gas pipeline unit sold by Petrobras, Nova Transportadora do Sudeste (NTS).
According to financial statements submitted by one of NTS’s shareholders, the company had net income of 1.3 billion reais during the first nine months of 2017.
Editing by Daniel Flynn and Leslie Adler