Repsol Said to Seek $4 Billion for IPO of Brazil Unit
July 30, 2010, 1:34 PM EDTBy Juan Pablo Spinetto and Esteban Duarte
(Adds information on Argentine stake in seventh paragraph)
July 30 (Bloomberg) -- Repsol YPF SA, Spain’s largest oil company, is seeking to raise about $4 billion from an initial public offering of its Brazilian business, valuing the unit at about $10 billion, two people familiar with the plan said.
Banco Santander SA, Bank of America Corp. and Itau Unibanco Holding SA are among banks managing the transaction, said the people, who declined to be named as terms of the deal aren’t yet public. Repsol is most likely to sell about 40 percent of its Brazil unit in the IPO, according to one of the people, who said banks are still working on a formal valuation proposal.
Repsol is seeking cash to fund exploration and production in Brazil, where it has stakes in the Guara and Carioca fields near Tupi, the largest discovery in the Americas since Mexico’s Cantarell in 1976. The company is planning to conduct the IPO by the end of the year and won’t wait for Petroleo Brasileiro SA’s planned $25 billion share sale, Repsol Chief Operating Officer Miguel Martinez said yesterday on a conference call.
Petrobras, as Brazil’s state-controlled oil company is known, on June 22 delayed plans to sell shares to September from July. Both Petrobras and Madrid-based Repsol are seeking to tap investor interest in Brazil’s so-called pre-salt fields, which lie deep beneath the ocean floor. Petrobras has said its Tupi find may contain as many as 8 billion barrels of oil.
Kristian Rix, a Repsol spokesman in Madrid, and a Santander official who can’t be named under company policy declined to comment. London-based Bank of America spokeswoman Victoria Garrod and Marcelo Motta of Banco Itau in Sao Paulo weren’t immediately available to comment.
Santos Basin Investment
Repsol is investing in Brazil’s offshore Santos Basin and elsewhere to increase output, while seeking to reduce exposure to mature fields in Argentina. The company on April 29 said it forecasts annual production growth of as much as 4 percent through 2014 as projects in Brazil and Peru come online. The company plans to invest 28.5 billion euros ($37.2 billion) in that period.
Repsol dropped 19 cents, or 1 percent, to 18.10 euros in Madrid. The stock has declined 3.3 percent this year, compared with a 12 percent fall for Spain’s benchmark IBEX 35 index.
Argentine Sale
Repsol is still planning to sell a stake in its Argentine unit YPF, Martinez said on yesterday’s call. The company is seeking to sell about 20 percent of YPF through a stock offering in Buenos Aires and New York, Sebastian Eskenazi, the chief executive officer of the business, said in a May 18 interview.
In 2008 Repsol delayed a public offering of a stake in YPF aimed at raising cash for expansion in Libya, Brazil and the Gulf of Mexico. Eskenazi, whose family bought 15 percent of YPF for $2.2 billion in December 2007, expects to exercise an option to boost the stake to 25 percent by 2012 this year, he said.
--With reporting by Joao Lima in Lisbon, Rodrigo Orihuela in Buenos Aires and Peter Millard in Rio de Janeiro. Editors: Carlos Caminada, Robin Saponar.
To contact the reporters on this story: Juan Pablo Spinetto in London at jspinetto@bloomberg.net Esteban Duarte en Madrid eduarterubia@bloomberg.net
To contact the editor on this story: Dale Crofts in Buenos Aires at dcrofts@bloomberg.net
