(Bloomberg) October 20, 2010 – Temasek Holdings Pte, Singapore’s state investment company, paid $400 million for a 14.3 percent stake in the oil services unit of Brazil’s Odebrecht SA as it increases its focus on emerging markets.
The investment in Rio de Janeiro-based Odebrecht Oil & Gas comes after Temasek opened offices in Mexico City and Sao Paulo about two years ago. The company also has investments in Brazilian real estate and retail companies.
Temasek owns stakes in the world’s two biggest oil-rig makers, Singapore’s Keppel Corp. and SembCorp Marine Ltd. via SembCorp Industries Ltd., and has invested more than $2 billion on energy and resources assets from the U.S. to India in the past year.
“The discovery and exploration of large deepwater oil and gas reserves, including those off the Brazilian coast, will have important economic significance and will pose relevant growth opportunities in the medium and long term,” Matheus Villares, Temasek’s managing director in the country, said in a statement.
Odebrecht Oil & Gas will spend $3.5 billion over the next three years and may sell shares in an initial public offering to finance future projects, Chief Executive Officer Miguel Gradin said at an event in Rio de Janeiro yesterday.
“For our next projects we will need project financing,” Gradin said. “It could be a mix of debt and equity.”
The Brazilian company plans to supply oil companies including state-controlled Petroleo Brasileiro SA with drilling rigs and platforms as Brazil plans to more than double oil output in the next decade.
Petroleo Brasileiro, known as Petrobras, has hired the first five deep-water rigs, Gradin said. Petrobras will use them to develop oil fields in the so-called pre-salt region of the Atlantic Ocean where Brazil found Tupi, the largest discovery in the Americas since Mexico’s Cantarell in 1976.
Odebrecht “is well positioned to take a leading position in Brazil,” said Villares at the event.
Odebrecht may expand in Angola and Mexico over the next two years after it deploys the rigs in Brazil, Gradin said. The company has operations at an offshore block in Angola, he said.
“Our preferred markets are where we have a presence,” Gradin said.
Temasek, whose assets climbed 43 percent to S$186 billion ($142 billion) as of March 31 from a year earlier, has transformed itself from a passive holder of stakes in state- owned companies such as Singapore Telecommunications Ltd. and Singapore Airlines Ltd. to an investor with more than two-thirds of its underlying assets abroad.
The value of Temasek’s investments in resources firms rose to S$11.2 billion as of March 31, or 6 percent of its total portfolio, from S$6.5 billion, or 5 percent, according to its annual report.
The owner of five of Singapore’s 10 largest companies by market value has invested $500 million of convertible preferred shares of Oklahoma City-based Chesapeake Energy Corp., the third-largest U.S. natural-gas producer. Other investments were made into companies including Platmin Ltd., SouthGobi Energy Resources Ltd. and GMR Energy Ltd.
By Peter Millard