Shockwaves reverberate in Brazil after TAG sale

20 December 2019 - 12:00 am UTC

Six months after the largest acquisition in Brazil’s history, the long-term implications of Engie and CDPQ’s gas pipeline deal are emerging. Further divestments, gasoduct sales and TAG’s greenfield expansion are all on the cards, reports Vinod Sreeharsha

The sale of the gas pipeline Transportadora Associada de Gas (TAG) by Petrobras to French utility ENGIE and the Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) earlier this year was a complex, time-consuming affair that took place amid great political uncertainty in Brazil and spanned two presidencies, two Supreme Court chief justices, and encountered multiple legal setbacks. 

But in the six months since the sale finally closed in June – after ENGIE and CDPQ together finalized acquiring 90% of TAG for BRL 33.5bn (USD 8.6bn) – it has quickly produced numerous benefits for the broader market. The deal has served as a major catalyst, spurring infrastructure investors to increasingly look at Brazil. Deal activity and interest in Brazil both picked up in the second half of this year, and 2020 looks brighter still, filled with opportunities, and especially for investors looking to acquire assets from dozens of state-owned companies in the country. 

“If this deal did not take place, it could have paralyzed future asset sales in the market by Petrobras,” among other effects, says one source who provided advisory services during the process and regularly speaks with foreign investors.

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