With Sale of Marfrig Shares, BNDES Starts to Wean “National Champions”

RIO DE JANEIRO, BRAZIL – The policy of strengthening large private Brazilian companies by means of public financing through the National Bank for Economic and Social Development (BNDES), which gave rise to the term “national champions” to those favored few, began to be dismantled officially on Tuesday, December 17th.

This was when the sale of a new issue of Marfrig shares (MRFG3) was finalized so that the development bank could sell its 34 percent stake in the meatpacking plant.

In the last week before the holidays, which typically halt the financial market, BNDES collected approximately R$2 billion (US$500 million) from the sale of securities.

In 2020, the trend will gain traction and the bank’s stock portfolio, currently at R$120 billion, should end the year below R$80 billion, according to the schedule already in circulation in the market. This is Gustavo Montezano‘s pledge, at the helm of BNDES since July.

For January next year, the sale of half of the institution’s stake in another “national champion”, JBS (JBSS3), is also on the agenda.

The operation will also be carried out via a stock offering and should yield over R$8 billion to BNDES. Soon after, by March, selling part of Petrobras‘ common shares held by the BNDES is on the agenda.

The development bank holds approximately 19 percent of the oil company’s preferred shares and 10 percent of the common shares (with voting rights), which are currently worth approximately R$ 56 billion. The stake, however, should not be fully undone in 2020.

The second half of its JBS stake will occur in the coming year and the plan is to close 2020 with no interest in the Batista family’s meatpacking plant. The BNDES holds around a 21 percent stake in JBS.

In the 2020 schedule, in addition to Petrobras (PETR3; PETR4) and JBS, the sales of Tupy and Copel energy company’s shares are expected to be completed. Among other giants in which the BNDES has a stake are companies such as Embraer, Vale, and Suzano.

History

The BNDES injected approximately R$1 billion in capital into Marfrig between 2007 and 2009 and also agreed to buy an additional R$2.5 billion in debt securities convertible into shares issued by the meatpacking plant in July 2010, to finance the purchase of the American Keystone Foods.

In 2017, the bonds were converted into shares and BNDES expanded its stake, drawing close to the founder of the meatpacking plant, Marcos Molina, who owns 36.43 percent.

Marfrig confirmed the share price at R$10 in the follow on, with the exit of BNDES despite the attempt to push the price up to R$10.25. In a published relevant fact on Tuesday night, Marfrig explained that the proceeds from the offer will be allocated to the prepayment of debts.

The money should help in the payment of its increased stake in the US subsidiary National Beef, recently announced in a US$860 million deal.

Source: InfoMoney