Brookfield Infrastructure consortium to take 90% stake in South American utility

Brookfield Infrastructure and institutional clients of Brookfield Asset Management have agreed to buy a 90% controlling stake in South American natural gas utility Nova Transportadora do Sudeste SA (NTS) from Petróleo Brasileiro SA, or Petrobras, for approximately $5.2bn.

NTS is a 2,048 km pipeline system that provides the transportation network for natural gas in Brazil's most industrialised and populated states in the south-central region of the country.

Most of the company's assets were installed in the last ten years, connecting the states of Rio de Janeiro, Sao Paulo and Minas Gerais with natural gas coming from Bolivia and Brazil's offshore oil and gas fields.

Brookfield Infrastructure’s investment will be a minimum of about 20% of the transaction, or $825m. The rest will be owned by institutional partners, while Petrobras will own 10% of NTS and will have customary governance rights commensurate with the size of its interest.

Brookfield’s chief executive officer Sam Pollock said: "This is a unique opportunity to invest in a large-scale, high quality utility business and participate over time in Brazil's growing gas industry.

"We expect this business will contribute meaningfully to our results going forward by delivering stable, inflation-linked cash flows backed by long-term, fixed-price, off-take agreements. We are very pleased to be significantly expanding our utilities business in a sector and geography that we know well and that we believe will offer opportunities to deploy further capital at attractive risk-adjusted returns."

Brookfield Asset Management’s institutional clients include CIC Capital Corporation and GIC Private Limited.