Petrobras needed to raise some money.
So investment bankers showed the company’s board that its oil fields in Nigeria, Angola and Namibia could be turned into a company itself in the way of an IPO, something like a “Petrobras Africa”, which would have a market value of between US$11 billion and US$17 billion. (for calculation simplicity, let’s use its mid-range US$ 14 billion).
The calculation is trivial: if Petrobras sells 25 % of this “new company” on the stock market, it would get about US$3.5 billion. If it sold half, it would raise US$ 7 billion.
But as news hub Folha de São Paulo showed on Sunday, Petrobras management takes pride in its history of making bad managerial decisions …
Instead of raising money by trying the IPO for “Petrobras Africa”, the board decided to hold an international auction to sell 100% of the African assets.
Fourteen potential bidders were invited; nine showed up. Then Petrobras changed its mind and decided to sell only 50% of the assets.
In other words, the Brazilian government, who freezes gas prices and mis-manage the company wanted a “partner” in Africa.
So how many interested party were left after this decision? Only two: Banco BTG Pactual from the entrepreneur André Esteves, and a Spanish company.
BTG offered more and became partners with the Brazilian government by paying only US$1.5 billion. In other words, Petrobras raised only 25% of what it could have earned had it made an IPO and sold half of the company in the stock market.
The Folha article notes that “in less than eight months” after the purchase of this asset, BTG has already received US$150 million in dividends.
Is this the smoothest form of corruption, or what?