Brookfield-led team to buy Petrobras pipeline for $5.2bn

A consortium led by Brookfield Infrastructure has agreed to buy a 90 percent stake in a Brazilian gas pipeline network in a deal worth $5.2 billion.

Brookfield is joining forces with a number of its institutional clients, including China Investment Corporation and Singapore’s GIC, to acquire the Nova Transportadora do Sudeste gas company from Petrobras. The move forms part of the Brazilian oil giant’s efforts to raise money by shedding several oil and gas assets.

Brookfield will invest a minimum of 20 percent of the total cheque, amounting to $825 million, with the remainder to be provided by institutional partners.

“This is a unique opportunity to invest in a large-scale, high-quality utility business and participate over time in Brazil's growing gas industry,” said Sam Pollock, chief executive of Brookfield Infrastructure, in a statement.

“We expect this business will contribute meaningfully to our results going forward by delivering stable, inflation-linked cash flows backed by long-term, fixed-price, off-take agreements. We are very pleased to be significantly expanding our utilities business in a sector and geography that we know well and that we believe will offer opportunities to deploy further capital at attractive risk-adjusted returns.”

An initial deal was agreed earlier this month, at which time Petrobas said it would disclose further details in due course. Sources told Infrastructure Investor then that the deal would cost north of $5 billion. It will be funded through Brookfield Infrastructure Fund III, which closed at a record-breaking $14 billion in July.

Brookfield said the deal would be paid in two tranches, with an initial disbursement of $4.3 billion. The remainder will be paid five years from closing, which is expected to take place in December.