Super Petrobras and the Largest IPO in Corporate History

The September issue of the Brazilian business magazine "EXAME" crowned Petrobras as the national "Superpoderosa" (the super powerful/ the Almighty). Rightly so, too. The company is already the biggest company in Brazil and one of the largest in Latin America. It is currently the 8th biggest oil company in the world. The company's shares feature in the top 20 most traded in the NYSE.

And in the next few days, it could enter the record books with the largest IPO in the world's corporate history (circa $75bn). If all goes well, the company's market value could surpass $220bn, making it the 4th largest listed company in the world, ahead of giants Walmart and Microsoft.

As already one of the most profitable oil companies in the world, it wouldn't be surprising if Petrobras overtook Exxon and BP in the race to world domination of the "black gold". The company already plans to invest $224bn until 2014 - more than any other listed oil company in the world. The organisation's excellent CSR record is also to be praised - from its investment in education, culture and environmental protection, Petrobras is considered a world reference in CSR and community development. Sure, there are technological and managerial challenges related to Petrobras' growth. But with the "jeitinho Brasileiro" (the Brazilian "way"), it is possible that the "superpoderosa" could take the world by surprise and succeed to the Global Crown of what is one of the largest industries in the world.

Eike the Spartan and How to make $100 billion in 10 years

Following the crisis, the richest people in the world have probably gotten poorer, just like the rest of us. But they are by no means poor. Eike Batista is a Brazilian entrepreneur that made most of his fortune in the mining sector. Batista rose to the top 10 of Forbes magazine’s billionaires list this week for the first time as his fortune soared to $27 billion. In 2009, the magazine ranked him as the 61st richest man in the world. He is now ranked 8th. And the man intends to become the richest by making $100bn in the next 10 years. How? I'm not quite sure. And apologies if the title misled you to believe that I would set out a cunning plan on "how to make you
$100bn richer in the next 10 years."

But such performance by Batista illustrates Brazil's potential in the global arena. It sets a good precedent and works as a strong indicator of the country's growth in the years to come. However, Brazil must continue its investment in infrastructure, energy and education. It must also keep an eye on its interest rates. The upcoming presidential elections will provide the world with a political laboratory to study the resilience of the Brazilian markets, and above all, to test the core policies of the next president.

Once characterised as a sleeping giant, Brazil's horizon is now relatively clear. The global political "axis of power" has flipped. A new world economic order is emerging. What role will the US play in the novus modus operandi? I haven't formed an opinion yet, but Eike seems to have a pretty good answer: "[the US is] now heavily indebted like Brazil was before. [It has] to be a little bit more Spartan. In the last 20 years [the US] has focused too much on banking and finance. The best students went to banks or law firms. Where are the engineers?"

News Update: Strong Brazilian Performance - but Vale should be careful in China

On Vale in China:

• The Chinese steel company Hebei Iron and Steel Group has made a request to the Chinese Trade Department that Vale limit its distribution operations in some parts of the Chinese territory. No good for Vale.

On Brazilian Equity Firms:

• Buyout firms are poised to spend $9 billion in Brazil on everything from infrastructure to oil exploration as the economy recovers from a recession.

On Renova’s IPO:

• Renova Energia SA, a Brazilian renewable energy company, said it may raise as much as 867.9 million reais ($480 million) in an IPO.

On Brazil’s Trade Surplus:

• Brazil posted a $394 million trade surplus last month after a deficit in January as exports rose more than imports. This is good as it means that we’re selling more than we’re buying.