SAO PAULO:'' Brazilian state oil company Petrobras raised $70 billion on Thursday, Sept 23 in the world's biggest share offering, giving the company the financial muscle it needs to tap vast offshore oil reserves.
The Rio de Janeiro-based company sold 1.87 billion new preferred shares at 26.30 reais each, the company said in a regulatory filing. It sold 2.4 billion new common -- or voting -- shares at 29.65 reais each.
The cash will help fund the world's largest oil exploration plan, which aims to turn Brazil into a major energy exporter. Uncertainty that the offering might not come off had brought a prolonged sell-off of Petrobras shares that shaved more than $70 billion off its market value.
But the optimism displayed by investors seeking exposure to one of the world's largest oil finds in recent decades outweighed worries about growing state involvement in the company's affairs.
"It priced at a very tight discount, which is comforting to know because the market expected it to price lower," said Marcio Macedo, who manages about $40 million of stocks for Sao Paulo-based Humaita Investimentos.
"After this very successful deal, markets will be in a good tone tomorrow." Macedo said the deal priced at a 2 percent discount to Thursday's closing price, much smaller than what investors expected.
The record-setting stock offering had total demand of $140 billion, with bids of $98 billion from existing shareholders and $42 billion from institutional investors, a source with knowledge of the transaction said.
Sovereign wealth funds from the Middle East and Asia were among the investors buying into the offering, the source said on condition of anonymity. The offering had "tremendous demand" from U.S. mutual funds, the source added.
Petrobras preferred shares, the company's most widely traded class of stock, rose 3.2 percent to 26.80 reais, outpacing a 0.7 percent rise by the Brazil's benchmark Bovespa stock index. That was the shares' largest single-day gain since Sept. 3.
The deal, comprising a $43 billion oil-for-shares swap with the government and the cash offer that investors settled, topped Japanese telecommunications firm NTT's $36.8 billion 1987 share sale and Agricultural Bank of China's $22.1 billion initial public offering earlier this year.
The share sale is a boon to the wildly popular President Luiz Inacio Lula da Silva as he seeks to usher his anointed successor, former chief of staff Dilma Rousseff, into office in a presidential vote on Oct. 3.
Lula, who leaves office on Jan. 1, campaigned in favor of the offering with an eye on capitalizing Petrobras, whose growing stature is a source of pride for many Brazilians and mirrors Brazil's rise on the global stage.
The capital plan was devised by the government to give Petrobras exclusive rights to develop 5 billion barrels of oil in one of the world's most promising energy prospects -- the deep waters off Brazil's southern coast that are believed to hold more than 50 billion barrels of crude. Banco Bradesco BBI, the investment banking arm of Banco Bradesco, was the lead manager of the offering.
Bank of America Merrill Lynch, Citigroup, Santander, Morgan Stanley and Itau BBA, the wholesale banking arm of Itau Unibanco, acted as global bookrunners of the deal.
The Rio de Janeiro-based company sold 1.87 billion new preferred shares at 26.30 reais each, the company said in a regulatory filing. It sold 2.4 billion new common -- or voting -- shares at 29.65 reais each.
The cash will help fund the world's largest oil exploration plan, which aims to turn Brazil into a major energy exporter. Uncertainty that the offering might not come off had brought a prolonged sell-off of Petrobras shares that shaved more than $70 billion off its market value.
But the optimism displayed by investors seeking exposure to one of the world's largest oil finds in recent decades outweighed worries about growing state involvement in the company's affairs.
"It priced at a very tight discount, which is comforting to know because the market expected it to price lower," said Marcio Macedo, who manages about $40 million of stocks for Sao Paulo-based Humaita Investimentos.
"After this very successful deal, markets will be in a good tone tomorrow." Macedo said the deal priced at a 2 percent discount to Thursday's closing price, much smaller than what investors expected.
The record-setting stock offering had total demand of $140 billion, with bids of $98 billion from existing shareholders and $42 billion from institutional investors, a source with knowledge of the transaction said.
Sovereign wealth funds from the Middle East and Asia were among the investors buying into the offering, the source said on condition of anonymity. The offering had "tremendous demand" from U.S. mutual funds, the source added.
Petrobras preferred shares, the company's most widely traded class of stock, rose 3.2 percent to 26.80 reais, outpacing a 0.7 percent rise by the Brazil's benchmark Bovespa stock index. That was the shares' largest single-day gain since Sept. 3.
The deal, comprising a $43 billion oil-for-shares swap with the government and the cash offer that investors settled, topped Japanese telecommunications firm NTT's $36.8 billion 1987 share sale and Agricultural Bank of China's $22.1 billion initial public offering earlier this year.
The share sale is a boon to the wildly popular President Luiz Inacio Lula da Silva as he seeks to usher his anointed successor, former chief of staff Dilma Rousseff, into office in a presidential vote on Oct. 3.
Lula, who leaves office on Jan. 1, campaigned in favor of the offering with an eye on capitalizing Petrobras, whose growing stature is a source of pride for many Brazilians and mirrors Brazil's rise on the global stage.
The capital plan was devised by the government to give Petrobras exclusive rights to develop 5 billion barrels of oil in one of the world's most promising energy prospects -- the deep waters off Brazil's southern coast that are believed to hold more than 50 billion barrels of crude. Banco Bradesco BBI, the investment banking arm of Banco Bradesco, was the lead manager of the offering.
Bank of America Merrill Lynch, Citigroup, Santander, Morgan Stanley and Itau BBA, the wholesale banking arm of Itau Unibanco, acted as global bookrunners of the deal.
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