Is Petrobras Going Private?

After being hit by a highly publicised corruption scandal, the future of Petrobras has been volatile. Now, the Brazilian state-owned company appears to be fast-tracking plans to sell off its petrol station business, BR Distribuidora. If the move goes ahead it will be one of Brazil’s biggest privatisations.

So what's promoted Petrobras to sell up? According to sources the move has been largely prompted by favourable market conditions. The company is keen to take advantage of the current landscape, with company CEO Pedro Parente confirming that in lieu of strong performance by Brazil’s stock market Petrobras is preparing BR Distribuidora for listing “as soon as possible.”

“We have to always be prepared so that if the market grins at us, we can go over there and give it a kiss,” said Parente in a recent interview.

Sale set to offset debt

Parente was appointed last year after Petrobras was dragged into a political corruption scandal labelled Lava Jato, or "Car Wash." It rocked the state-owned company, and sparked over two dozen shareholder lawsuits. Parente has admitted that as well as taking advantage of market conditions, the sale will also help to reduce the company’s debt.

According to Parente BR Distribuidora will be listed on Brazil’s Novo Mercado, a category of the private market that's reserved for companies with high governance standards. It confirms the fact that while the at least half of the new board will consist of independent directors, the Brazilian government will still maintain control over 50% of BR Distribuidora.

New directors cherry picked by international head-hunter

To avoid political motivated appointments new directors will be handpicked by the government from a shortlist put forward by a nonbiased international head-hunter. This is crucial, particularly as Petrobras is still recovering from Lava Jato which saw the company riddled with bribery.

Parente maintains that the strict governance will not only attract a better evaluation from investors, but will also "increase the protection of the company so that the problems of the past do not repeat themselves."

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