Brazil government aims to sell at least $20 billion in assets this year

January 29, 2019

By Tatiana Bautzer

SAO PAULO (Reuters) – Brazilian President Jair Bolsonaro’s government wants to sell at least $20 billion in assets of state-owned companies this year including parts of Petrobras and Banco do Brasil, the country’s secretary of privatization said on Tuesday.

Salim Mattar, a former businessman, said the government wants state-controlled oil company Petroleo Brasileiro SA and lenders Banco do Brasil SA and Caixa Economica Federal to sell most of their subsidiaries within four years.

“Why does the Brazilian state have to sell insurance products? It makes no sense,” Mattar said during a speech at an investment conference hosted by Credit Suisse Group AG in Sao Paulo.

In his presentation, Mattar listed all Caixa’s insurance subsidiaries and Banco do Brasil’s asset manager BB DTVM as potential privatization targets.

Mattar, the founder of car rental company Localiza, said Petrobras should sell most of its 36 subsidiaries, while Banco do Brasil could sell up to 16.

He added that he expects those divestitures to be far easier than the privatization of state-owned companies controlled by government ministries, such as the post office or Infraero, which owns state stakes in airport operators.

He added that the government planned to privatize state utility Centrais Eletricas Brasileiras SA by selling additional shares on the market to raise capital.

Shares in the utility, known as Eletrobras, were up 7.9 percent in late morning trading, leading the Bovespa higher. Shares in Petrobras were up two percent.

Mattar estimated all Brazil’s state-owned companies are worth between 700 billion reais ($187 billion)and 800 billion reais ($214 billion).

The privatization secretary also surprised the audience by saying Bolsonaro’s government wants to shut down Brazilian development bank BNDES’s investment arm, after selling all the stakes in private companies it owns. He valued those stakes at 110 billion reais ($29.4 billion).

Mattar said the government and Brazil’s audit court TCU have agreed to set up a department within the court specialized in privatization, to streamline the sale of government assets.

($1 = 3.7405 reais)

(Reporting by Tatiana Bautzer; Editing by David Evans and Frances Kerry)