Petrochemical industry could draw up to R$40bn
The Brazilian petrochemical industry is going through a new consolidation cycle and is expected to draw foreign capital - unlike most other economic sectors in the country. The shift reflects, to a large extent, the growth difficulties faced by traditional groups after the stimulus to the so-called national champions.Braskem, for example, was the result of this model with the formation of a partnership between Petrobras and Odebrecht (now Novonor). Furthermore, there were structural problems that undermined the sector’s competitiveness in recent years.In addition to the sale of Novonor’s 38.3% stake in Brazil’s largest petrochemical company, the Geyer Abubakir family, Unipar’s controlling shareholder, has hired Essentia Partners and is considering combining its assets with a rival or attracting a private equity fund. Asset manager Apollo presented the holding company a proposal for the asset before the Geyer family sought an advisor.Petrobras is also selling its almost 28% stake in the Deten chemical company and may get rid of Copenor, a petrochemical company. Meanwhile, Unigel, owned by the Slezynger family, has filed for an IPO to raise $500 million, sources say.The expectation is that, in the next 12 months, mergers and acquisitions in this sector will total $23.4 billion, sources say. The figure includes the value of Novonor’s slice in the petrochemical company - excluding premium payment for the sale of the business - and the estimates of how much Unigel can raise with the IPO and a possible combination of assets of Unipar. The combined amount may reach R$40 billion, should Petrobras decide to sell its stake in Braskem, also without considering the premium.The main bet is that private equity funds with historical bets in the sector and foreign chemical groups strong in the global market will play a prominent role in the reorganization of the local industry. The most recent example is the acquisition of Oxiteno, which belonged to Ultra, by the Asian group Indorama, for $1.1billion.The challenges to the new players will not be few. According to a businessman of the sector, many Brazilian petrochemical companies are in their best shape in terms of results and operation, but macroeconomic and political instability weighs on negotiations."To a good extent, the industry has done its part to ensure competitiveness, and this attracts investors. But some issues are beyond our reach and end up hindering the fair valuation of assets," said the...
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