BTG Increases Oil Bet With $1.5 Billion Petrobras Venture

Grupo BTG Pactual SA (BBTG11), the Brazilian bank led by billionaire Andre Esteves, agreed to pay $1.5 billion to form a joint venture in Africa with Petroleo Brasileiro SA as part of an incursion into the oil industry.

The agreement sees BTG taking 50 percent of Petrobras’s assets in Angola, Benin, Gabon, Namibia, Nigeria and Tanzania and the two companies teaming up to explore and produce oil and gas, according to a June 14 statement by the Sao Paulo-based bank. Petrobras shares rose 2.4 percent to 18.49 reais at 10:44 a.m. in Sao Paulo. BTG climbed 1.2 percent to 31.08 reais.

The sale by state-controlled Petrobras is part of a plan to divest $9.9 billion as it seeks to focus on the development of oil reserves off the coast of Brazil. For BTG, which held a $1.93 billion initial public offering last year, the partnership is the latest step in diversifying its investments.

“The valuation of the African assets seems fare,” Banco Itau SA analysts Paula Kovarsky and Diego Mendes said in a note to clients dated June 16. The market has been waiting for Petrobras sales since 2012 and it “helps the company’s indebtedness a little,” they wrote.

Batista Accord

Last year, BTG announced the creation of a $1 billion public equity fund focused on Africa. The bank signed on March 6 a so-called strategic agreement with billionaire Eike Batista’s holding company EBX Group Co., whose biggest unit is oil producer OGX Petroleo e Gas Participacoes SA. (OGXP3) That agreement includes credit, financial agreements and future joint investments. BTG also owns stakes in Sete Brasil SA, an rig provider to Petrobras, and in Brasbunker Participacoes SA, an offshore transportation and oil and gas company.

BTG agreed last year to join former Vale SA Chief Executive Officer Roger Agnelli to create B&A Mineracao SA, a mining venture seeking opportunities in Latin America and Africa.

Petrobras also agreed to sell a 49 percent stake in hydroelectric generator Brasil PCH SA to Cia Energetica de Minas Gerais for 650 million reais ($302 million), according to a separate June 14 statement distributed after the close of trading.

Petrobras this year lowered its divestiture program from an original $14.8 target because the company has traditionally been a buyer rather than a seller and overestimated demand, Chief Executive Officer Maria das Gracas Foster said March 15.

To contact the reporters on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Charles Siler at csiler@bloomberg.net

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