Aberdeen-Led Minority Investors Win 2nd Petrobras Board SeatPeter Millard
Petroleo Brasileiro SA minority shareholders led by Aberdeen Asset Management Plc won a second board seat in a year as they seek to steer Brazil’s state-run oil producer toward higher profits.
Jose Guimaraes Monforte, nominated by Aberdeen, joins Mauro Cunha, the head of Brazil’s capital markets association, in a 10-member board dominated by government officials and led by Brazilian Finance Minister Guido Mantega. Cunha was elected for a second year at a shareholders meeting yesterday after becoming the first-ever representative of minority investors in the group little less than a year ago.
Europe’s largest publicly traded money manager is pushing for board members with financial experience as subsidized fuel sales and declining crude output undercut earnings. Rio de Janeiro-based Petrobras, which sold $70 billion in shares in 2010 on promises of boosting output, has lost 70 percent of its market value since a mid-2008 peak and has seen production drop to the lowest in four years.
“Jose Monforte will be able to collaborate significantly to adopt management models that are in the interest of all shareholders, such as setting a fuel price policy,” Aberdeen, which oversees almost $300 billion of assets, said in an e-mailed statement yesterday. “The election of Monforte is a step toward generating value for the company.”
Petrobras’s output decline last year contrasted with a 2010 goal to boost production 9.4 percent a year through 2014 by starting deep-water fields. Subsidies contributed to 17.7 billion reais ($7.8 billion) in losses for its refining and distribution unit last year.
Monforte, an economist, has held positions in the finance industry including the head of Merrill Lynch & Co.’s Brazilian unit from 1979 through 1987 and chief executive officer of Pragma Gestao de Patrimonio, a Sao Paulo-based asset management firm. He has also served on the boards of companies including Claro SA and Natura Cosmeticos SA.
“What is important, especially in a government-run entity, is to constantly put pressure and constantly remind every single board member that they are responsible for whatever they do,” Rafael Rocha, an investor who helped organize minority investors to vote for Monforte, said in an interview at the meeting. “It’s soft power.”
Other investors who backed Monforte include Hermes Fund Managers, APG Asset Management and Amundi Asset Management, according to information on Petrobras’s website. Monforte replaces Jorge Gerdau, the chairman of Gerdau SA, Brazil’s biggest steelmaker by market value. A group of investors led by Bradesco Asset Management was supporting Gerdau’s re-election.
“I’m taking it as a big responsibility,” Monforte told Bloomberg at the shareholder meeting, declining to comment further.
Mantega was re-elected chairman and will represent the government, which controls Petrobras with a majority of voting shares.
“They can say what they think but in the end it’s the government calling the shots,” Eric Conrads, a money manager who helps oversee $500 million in Latin American stocks at ING Groep NV, said by telephone.
Petrobras fell 2.7 percent to 15.17 reais at 10:51 a.m. in Sao Paulo, more than the 0.8 percent drop in Brazil’s benchmark index. The stock has dropped 11 percent so far this year.