February 27, 2019 / 2:43 PM / 8 months ago

Brazil's workers fund to sell Banco do Brasil, Alupar stakes, seek IPO - sources

SAO PAULO, Feb 26 (Reuters) - Brazil’s government is exploring the sale of assets held by a workers severance fund to raise funds for new infrastructure projects, two people with knowledge of the matter said, as part of a wider effort to unload state-controlled assets.

The sources, who requested anonymity to disclose private discussions, said right-wing President Jair Bolsonaro’s government believes that some previous investments by the fund, known as FI-FGTS, had appreciated to a point where they were worth selling to fund new projects.

Bolsonaro’s government has been looking for ways to bolster the country’s sagging infrastructure with injections of private capital. His administration previously said it planned to auction rights to operate 23 infrastructure projects, mainly existing airports, within his first 100 days in office.

The FI-FGTS severance fund, launched 12 years ago to fund construction of railways, ports, airports, sewage, energy and roadways, had 34.3 billion reais ($9.13 billion) in assets, according to its last publicly available financial statements. It is financed by payroll taxes paid by individuals and private companies.

The easiest assets to sell are a 3.6 billion-real ($961 million) stake in Banco do Brasil SA, equivalent to 2.5 percent of its capital, and 800 million reais in power holding company Alupar Investimento SA shares, since both are listed companies.

FI-FGTS also holds stakes in private companies, including 30 percent of sanitation company BRK Ambiental Participações SA, controlled by Canada’s Brookfield Asset Management, and 16 percent of logistics holding VLI Logistica.

Brazil’s government is considering initial public offerings to unload its stakes in BRK and VLI, valued at 667.7 million reais and 1.3 billion reais in June 2017, respectively, the sources added.

State-controlled bank Caixa Economica Federal, which manages FI-FGTS, and which has been reviewing some of its own equity holdings, did not immediately comment on the matter.

Still, a decision to begin the sale process of these assets depends on the appointment of board members of the fund by the new government. The 12-member board includes six representatives of the government as well as workers and employers. ($1 = 3.7469 reais) (Reporting by Carolina Mandl; Editing by Christian Plumb and Susan Thomas)

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