Time to ice the cachaça?

21 September 2010 By Christopher Swann

Despite potential for underperformance and government meddling, the Brazilian oil giant s upsizing of its already huge offering hints at keen demand maybe even from sovereign wealth funds. If investors really think Petrobras can deliver on its plans, there s hefty upside.

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Brazilian oil giant Petrobras said on Sept. 17 its massive share issue could reach $79 billion, expanding what was already the largest stock offer in history in a possible sign of strong investor demand.

Statecontrolled Petrobras said its bankers could exercise a greenshoe option to sell an additional 940 million shares to meet extraordinary demand, compared with an original option to sell 564 million shares, as the company raises funds for the world's biggest oil exploration program.

That could be a sign that investors are overcoming concerns about a $43 billion oilfor shares swap with the government that is included in the operation.

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