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Goldman Is Financing Mubadala’s $8 Billion Petrobras Unit Bid

Updated on
  • Brazilian gas pipeline is said to attract other competitors
  • At least one group considers top offer as too high to compete

Petroleo Brasileiro SA (Petrobras) headquarters in Rio de Janeiro, Brazil. 

Photographer: Dado Galdieri/Bloomberg

Goldman Sachs Group Inc is arranging financing for Mubadala Development and EIG Global Energy Partners ahead of a bid for Petroleo Brasileiro SA’s natural gas pipeline network in northeastern Brazil, said three people with knowledge of the matter.

The offer may go as high as $8 billion for the enterprise value, which includes debt, one of the people said, asking not to be identified because the discussions are private. Two other groups, one led by French utility Engie SA and the other by Sydney-based Macquarie Group Ltd., are also competing for 90 percent of the Petrobras subsidiary known as TAG, other people said. At least one of those consortiums considers an eventual $8 billion bid to be too high to compete with, the people said.

Transportadora Associada de Gas, a 2,800-mile network that spans ten Brazilian states, could be Petrobras’ largest asset sale to date and accounts for more than a third of the state-controlled energy company’s $21 billion divestment target for the two years through 2018. Petrobras will collect binding offers this month.

Blackstone Group LP and Patria Investimentos Ltda withdrew from the process in December after considering a bid of about $6 billion, said two people familiar with the matter.

Goldman Sachs, which is said to be advising Mubadala group, declined to comment, as did EIG, Petrobras, Engie, Blackstone and Macquarie. Patria and Mubadala didn’t immediately reply to a request for comment.

In 2016, Petrobras sold Nova Transportadora do Sudeste, a similar but smaller pipeline network in the southeast, for $5.2 billion to a consortium led by Brookfield Asset Management that also includes Itausa - Investimentos Itau SA.

Itausa is said to be competing for TAG in association with Macquarie, Canada Pension Plan Investment Board, and Singapore’s GIC Private Limited, said two people with direct knowledge of the matter.

Itausa, GIC and CPPIB didn’t immediately reply to an email seeking comment.

Itausa is studying if it will participate in the TAG sale but hasn’t made a firm commitment, Chief Executive Officer Alfredo Setubal said Feb. 20 on a conference call with investors. He declined to provide additional details.

Setubal said Itausa’s investment in the southeast pipeline is working out better than they expected at the time of the purchase and has a “huge potential for growth.” The return on equity beats that of Itausa’s main investment, Itau Unibanco Holding SA, Latin America’s largest lender, he said. The NTS pipeline gave Itausa a net payout of around 172 million reais ($53.4 million) in 2017, according to a regulatory filing.

The TAG sale is expected to surpass NTS in value as its network is more than twice as long. TAG’s debt is larger than the liabilities NTS had which partially accounts for the higher sale price, one of the people said.

Petrobras Chief Executive Officer Pedro Parente is rushing to meet his divestment target before an unpredictable presidential campaign later this year makes it harder to sell assets. Parente said late last year that ideally all deals should be set by the end of the first half of 2018 and be closed by December.

— With assistance by Felipe Marques, David Carey, and Francois De Beaupuy

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