Petrobras stake sale raises 7.3 billion reais for Brazil lender Caixa

[SAO PAULO] Caixa Economica Federal raised about 7.3 billion reais (S$2.57 billion) by selling a stake in oil and gas giant Petroleo Brasileiro SA (Petrobas) as Brazil's biggest state-owned lender works to help the government reduce its debt.

Caixa sold about 241.3 million shares at 30.25 reais apiece, according to a person familiar to the matter who asked to not be identified because the matter isn't public yet. The offering in Brazil and New York included only ordinary shares, the ones with voting rights.

Proceeds will be used to help the lender pay back 40 billion reais in perpetual bonds to Brazil's federal government, which is pushing to reduce a budget deficit that remains above 6 per cent of gross domestic product.

Pedro Guimaraes, who took over as Caixa's chief executive officer on Jan 7, said the bank plans to sell more assets.

"Our priority is to brutally shrink expenses and make some strategic moves, even before we move on to doing IPOs (initial public offerings) of our subsidiaries," he said.

The lender plans dual listings in Brazil and New York to sell minority stakes in its insurance and card units this year. The asset-management and lottery subsidiaries will go public in 2020, he said.

To spearhead asset sales, Mr Guimaraes brought in former UBS Group investment-banking executive Andre Laloni as chief financial officer. Since his arrival, a fund managed by Caixa sold its 2.5 billion-real stake in IRB Brasil Resseguros SA, Latin America's biggest reinsurer. The deal, the new government's first privatisation, gave Caixa a gain of more than 800 per cent on shares purchased in 2015.

Underwriters for the Petrobras transaction were Caixa's investment bank, UBS, Morgan Stanley, Bank of America and XP Investimentos SA, according to a filing.

BLOOMBERG