Brookfield Eyes Divesting BRK Ambiental via Brazilian IPO

Brookfield is making moves in Brazil to potentially divest one of its holdings via an initial public offering on the South American country’s stock market.

The Canadian asset manager is restructuring its Brazilian infrastructure assets, Valor International reported.

Highway operator Arteris, sanitation company BRK Ambiental, railway operator VLI and power transmission firm Quantum are purportedly on Brookfield’s chopping block. The investment firm is expected to divest its stake in BRK, as the sanitation company has undergone internal restructuring over the past two years and is viewed by industry experts as an ideal choice to revive Brazil’s dormant IPO market.

“After several years without IPO activity in Brazil, we are starting to see capital markets showing signs of improvement,” Alexandre Thiollier, managing partner for Brookfield private equity, told analysts in a conference call, according to Valor. “BRK is prepared to pursue an IPO when market conditions become attractive.”

BRK, which is already registered with Brazil’s Securities and Exchange Commission, attempted an IPO in 2022 but the effort was abandoned. At the time, the 30-percent stake in the company held by Brazil’s FI-FGTS pension fund was an obstacle, as the fund has limited flexibility on pricing, per Valor. Brookfield was reportedly seeking a valuation above what the market was willing to pay.

Among Brookfield’s portfolio, BRK is considered a mature asset, making it a prime option for divestment and an IPO, according to the report. Meanwhile, other assets in the firm’s infrastructure division are undergoing restructuring as they prepare for potential sales.

Brookfield didn’t comment on any potential transactions that might be in the works. “Buying and selling assets are natural cycles in our business,” the company told Valor. “We are constantly evaluating opportunities to recycle capital from mature assets, securing significant returns to enable new investments.”

Brookfield, which operates in multiple Brazilian sectors, has acquired R$31 billion (about US$5.6 billion) in assets and sold R$20 billion (about US$3.6 billion) in mature assets over the past five years. The firm manages more than R$200 billion (US$36 billion) in Brazil.

— Chris Malone Méndez