Brazil basks in record Petrobras deal
SAO PAULO (Reuters) - President Luiz Inacio Lula da Silva hailed a "new chapter in Brazil's development" on Friday after state oil company Petrobras sold $70 billion in shares at a higher-than-expected price, a record deal that could make the country one of the top global energy exporters.
Clad in a bright-orange Petrobras jumpsuit and hard hat, Lula told a gathering of business leaders at the Sao Paulo stock exchange that the transaction should provide billions of dollars for investment that will propel Brazil closer to its dream of developed-world status.
"God has been very generous with the Brazilian people, who have long waited for the chance to be as respected in the world as we are today," Lula said to cheers and applause.
Thursday's stock sale, greeted by heavy demand from investors ranging from U.S. mutual funds to Middle East sovereign wealth funds, amounts to a heavy bet on one of the world's biggest recent oil finds.
The windfall from the world's biggest stock offering in history is part of Petrobras' $224 billion investment plan over the next five years to exploit the so-called subsalt area, a reserve discovered off Brazil's southern coast in 2007.
It contains up to 50 billion barrels of difficult-to-extract but high-quality crude under a thick layer of salt four miles beneath the ocean's surface.
Petrobras shares sagged a bit in Brazil as traders took profits after months of lead-up to the deal. Preferred shares were down 0.4 percent and common shares slipped 0.2 percent. The company's American Depositary Receipts rose 0.2 percent in New York.
The sheer magnitude of the transaction has caused Petrobras to affect virtually every other sector of Brazil's economy, including foreign exchange markets.
The real strengthened slightly on Friday as traders anticipated a massive inflow of foreign dollars associated with the Petrobras deal, and Brazilian capital markets also were preparing for a wave of transactions by other local companies now that the long-awaited sale had passed.
STATE WORRIES PUSHED ASIDE, AT LEAST FOR NOW
The transaction fulfilled Lula's goal of increasing state control over Petrobras, which he and Dilma Rousseff, his likely successor as president next year, see as critical to ensuring that Brazil reaps the maximum benefits from the subsalt find.
Finance Minister Guido Mantega said the federal government had increased its stake in Petrobras to about 48 percent from 40 percent. Brazil's sovereign wealth fund, state-owned national development bank BNDES and other state enterprises also bought shares, he added.
"The deal was a huge success," Mantega said. He ruled out any risk of a so-called oil curse in Brazil, which plans to set aside the lion's share of the revenues for long-term investment in roads, schools and other infrastructure.
The state's heavy hand in the transaction had rattled investors for months prior to the deal.
The preferred shares had slumped 27 percent since the start of 2010, partly because of worries that Petrobras' plans to expand in labor-intensive but less-profitable areas such as refineries were designed to satisfy Lula's political objectives instead of minority shareholders.
But despite the concerns, Petrobras was able to sell 1.87 billion preferred shares at 26.30 reais each and 2.4 billion common shares at 29.65 reais -- a smaller-than-expected discount of 2 percent discount to Thursday's closing price.
The stock sale, which was larger than what the Rio de Janeiro-based company originally planned but below the maximum it had filed to sell, had total demand of $87 billion, a source with knowledge of the deal told Reuters on Thursday.
The deal topped Japanese telecommunications firm NTT's <9432.T> $36.8 billion 1987 share sale and Agricultural Bank of China's <601288.SS> $22.1 billion initial public offering this year.
(Additional reporting by Elzio Barreto, Writing by Brian Winter; Editing by Todd Benson and Lisa Von Ahn)