Wal-Mart in talks to sell major stake in Brazil operations

Above, a man talks on his mobile phone in front of a Wal-Mart store in Sao Paulo, Brazil. Wal-Mart’s operations in Brazil had not improved over the last two years, which coincided with the country’s harshest recession in decades. (Reuters)
Updated 22 January 2018
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Wal-Mart in talks to sell major stake in Brazil operations

SAO PAULO: Wal-Mart Stores is in talks with buyout firm Advent International Corp. and other funds to sell a major stake in its Brazilian operations, two people with direct knowledge of the matter said on Sunday.
Wal-Mart is being advised by Goldman Sachs & Co, according to one of the sources who spoke on condition of anonymity. Other private equity firms that are looking into the investment in the Brazilian unit are GP Investments and Acon Investments, the source added.
Wal-Mart officials in Brazil declined to comment. Advent and GP declined to comment. Goldman and Acon did not immediately reply to requests for comment.
Wal-Mart’s overseas business is not the growth driver it once was as it has continued to grapple with an economic slowdown in Brazil and competition from discount retailers in the UK.
In 2016, Wal-Mart Chief Executive Officer Doug McMillon flagged to investors that he was planning to review its global operations. His comments had sparked speculation that Wal-Mart would look to restructure or even pull out of markets where it has struggled. Brazil was among the countries most often cited by analysts as a potential target.
During the same year, Wal-Mart shuttered at least 10 percent of its stores in Brazil and shed non-core businesses across Latin America. It also sold its e-commerce business in China to Chinese e-commerce company JD.com and picked up a stake in JD.com instead of trying to crack the market on its own.
A partial exit by Wal-Mart from Brazil comes as Chief Operating Officer Judith McKenna takes over the international unit of the world’s biggest retailer. The move would give a new partner the chance to turn around a sprawling operation that has struggled to turn a profit.
Wal-Mart entered Brazil in 1995 and had grown into the country’s third-largest retailer following two major acquisitions in 2004 and 2005 and a period of rapid store expansion that came to a halt in 2013.
It currently operates 471 stores in Brazil, according to the company’s local website. The retailer’s Brazilian unit reported revenues of almost 30 billion reais (SR35 billion) in 2016.
Wal-Mart has posted operating losses in Brazil for seven years in a row after an aggressive, decade-long expansion left it with poor locations, inefficient operations, labor troubles and uncompetitive prices, Reuters reported early in 2016.
One of the people with knowledge of the deal said Wal-Mart’s operations in Brazil had not improved over the last two years, which coincided with the country’s harshest recession in decades.
Wal-Mart began sounding out possible investors in the unit several months ago but got no interest from rival retailers, which led the company to seek out buyout firms, the source said.
The retailer intends to keep a stake in the Brazilian unit to be able to recoup part of its losses in the country later if an economic recovery and restructured operations boost results, according to the source.
Retail sales in Brazil are starting to recover from the recession. Christmas sales were 5.6 percent higher than a year ago, according to credit data supplier Serasa Experian.
Earlier on Sunday, newspaper O Globo said private equity Advent was in talks to acquire 50 percent of the Wal-Mart unit. The paper did not say how it got the information or any details on the state of the talks.


Aramco committed to meeting future oil demand, says Saudi energy minister

Updated 17 August 2018
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Aramco committed to meeting future oil demand, says Saudi energy minister

  • Aramco has discovered two new oil fields, Sakab and Zumul, and a gas reservoir in the Sahba field
  • World’s top oil exporter is also boosting its output of the natural gas needed to meet rapidly rising domestic power demand

DUBAI: Saudi state oil giant Saudi Aramco remains committed to meeting future oil demand through continued investments, the kingdom’s Energy Minister Khalid Al Falih said in a company report on Friday.
Aramco, which is slated for a public share sale, “continued to prepare itself for the listing of its shares, a landmark event the company and its board anticipate with excitement,” Al Falih, who is also chairman of Saudi Aramco, said.
Despite an improved market picture, the oil industry’s preparedness for the future remained in question as the sector had lost an estimate $1 trillion in planned investments since the start of the market downturn, Al Falih wrote.
“Significant new investments are required in additional capacity and expended and upgraded infrastructure, as well as the development of pioneering technology to make petroleum energy more sustainable and accessible,” he said.
The company discovered two new oil fields, Sakab and Zumul, and a gas reservoir in the Sahba field, Aramco said in the report.
Aramco said “it will maintain its position as the world’s leading crude oil producer by production volume by tempering production from mature fields, accelerating younger fields and secondary reservoirs, and developing fresh reserves from new increments.”
The world’s top oil exporter is boosting its output of the natural gas needed to meet rapidly rising domestic power demand and supply raw materials to its strategically important petrochemical industry.
In gas, Aramco “commenced projects to expand production and processing capacity, and brought online the first unconventional gas in Saudi Arabia,” Aramco’s Chief Executive Amin Nasser said in the report.
Aramco was preparing the Midyan non-associated gas field last year to produce 75 million standard cubic feet per day (scfd) of non-associated gas and 4,500 barrels of condensate per day, it said in the report.
Midyan is one of the new gas fields in northwest Saudi Arabia to produce gas for power plants and potentially supply other industries in a region rich in iron ore deposits. It was discovered in the 1980s and has significant reserves.