Repsol Said to Seek Private Investors Before $4 Billion Brazil Share Deal

Repsol YPF SA, Spain’s largest oil company, is seeking companies to invest in its Brazilian unit privately before a planned initial public offering, according to two people familiar with the situation.

Any so-called private placement should be reached by early September, before Repsol concludes the details of the share sale, said the people, who declined to be identified because the talks are not public. Repsol could cancel the share sale if it agrees on a private arrangement, according to one of the people.

The Madrid-based oil producer, which plans to sell about 40 percent of its Brazilian business, filed to sell voting shares in the unit on Aug 9. Repsol will use proceeds from the IPO to fund exploration and production at Brazilian offshore fields such as Guara and Carioca, located near Tupi, the largest discovery in the Americas since Mexico’s Cantarell in 1976.

Kristian Rix, a Repsol spokesman in Madrid, declined to comment today. Repsol is seeking to raise about $4 billion from the stock sale, two people familiar with the plan said in July.

The company is planning to conduct the IPO by the end of the year and won’t wait for Brazil’s state-controlled oil producer, Petroleo Brasileiro SA, which is planning its own $25 billion share sale, Repsol Chief Operating Officer Miguel Martinez said July 29 on a conference call.

Attracting Oil Producers

Brazil’s appeal increases after the Gulf of Mexico oil spill in April halted U.S. deep-water drilling and is expected to make explorations more costly, said Roger Tissot, an independent energy consultant in Vernon, British Columbia. BP Plc said Aug. 9 the cost of stopping and cleaning up the spill from its damaged well had risen to $6.1 billion.

“As the expected new regulations make the Gulf of Mexico more expensive, Brazil is becoming more attractive to the big oil companies,” Tissot said in a telephone interview today. “Brazil offers what these companies are good at: the ability to operate complex projects.”

A group of investment banks led by Banco Itau BBA are working on the share sale, Repsol said in a preliminary IPO prospectus filed to the securities regulator last week. Other participants are Banco Santander SA, Bank of America Corp., Credit Suisse Group AG, Barclays Plc and Banco BTG Pactual SA, it said.

The prospectus didn’t disclose the value of the sale or the date it expects to sell the shares.

Repsol fell 7 cents, or 0.4 percent, to close at 18.055 euros at 5:35 p.m. in Madrid today.

To contact the reporter on this story Juan Pablo Spinetto in London at jspinetto@bloomberg.net

• Tweet
• More
  • Business Exchange
  • Buzz up!
  • Digg
• Print
• Email