Galp picks banks for $3 bln Brazil deal-sources

Tue May 3, 2011 1:21pm EDT

Related Topics

* Galp hires BAML, JPM, UBS for Brazil deal, sources say

* Galp wants to raise $3 bln-plus by end of third quarter

* Diario Economico says IPIC and Chinese bidders circling

By Quentin Webb

LONDON, May 3 (Reuters) - Portuguese oil company Galp Energia (GALP.LS) has hired Bank of America Merrill Lynch, JPMorgan and UBS to help it raise about $3 billion by selling a stake in its Brazilian unit, people familiar with the matter said on Tuesday.

Galp plans to raise at least 2 billion euros ($2.95 billion) to help finance its part in the development of massive oil fields in Brazil's so-called subsalt region -- site of the largest oil discovery in the Americas for more than 30 years.

Any buyer is likely to be offered new shares representing at least 20 percent of the Brazilian subsidiary, people familiar with the matter said -- enough to allow a buyer to book a pro-rata share of the subsidiary's reserves.

Galp first announced plans for the fundraising in March. Last Friday Chief Executive Manuel Ferreira De Oliveira told analysts Galp hoped to close a deal by the end of the third quarter and had hired three banks, which he did not name.

Ferreira De Oliveira said several potential buyers had shown "considerable interest" and Galp was ready to work with "both specialised financial investors and corporate entities".

Galp, Bank of America, JPMorgan and UBS all declined to comment. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Brazil offshore oil graphic link.reuters.com/wec82j ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Any eventual deal could resemble Repsol's (REP.MC) $7 billion sale of a 40 percent stake in its Brazil division to Sinopec (0386.HK) (600028.SS) of China.

On Friday, Portugal's Diario Economico reported Sinopec and its Chinese peers PetroChina (0857.HK) (601857.SS) and CNOOC (0883.HK) were interested in buying a stake.

The newspaper said Cepsa CEP.MC, the Spanish oil refiner backed by Abu Dhabi's International Petroleum Investment Company (IPIC), was also interested in Galp assets. IPIC is seeking full control of Cepsa.

Galp is a minority partner with Brazil's state-run Petrobras (PETR4.SA) in key offshore discoveries, including the vast Lula field and the Cernambi and Iara finds.

Analysts have long questioned Galp's ability to finance its part in the offshore projects, which require pumping oil from as much as 7,000 meters (4.3 miles) below the ocean's surface. ($1=.6773 euros) (Additional reporting by Andrei Khalip in Lisbon; Editing by Greg Mahlich)

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