(Reuters) – Brazilian billionaire Abilio Diniz is considering selling a large portfolio of commercial properties for about 2 billion reais (US$706 million), a move that would give him extra funds to ramp up his investment in France’s Carrefour SA, two sources with direct knowledge of the plans said.
Península Participações, the investment vehicle overseeing Diniz’s fortune, has discussed the sale of 62 supermarkets with Canada Pension Plan Investment Board (CPPIB), Brookfield Asset Management Inc and BR Properties SA, said the first source, who requested anonymity because the talks remain private.
Diniz, 78, bought a 10 percent stake in Carrefour’s Brazilian unit for 1.8 billion reais in December and has an option to raise that to 16 percent over five years. He also acquired a 2.4 percent stake in Paris-listed Carrefour last year.
Diniz signed 40-year leases for the supermarkets with GPA SA about 10 years ago, when he still chaired the company. He left GPA in September 2013 after losing a battle for control of the company to France’s Casino Guichard Perrachon & Cie.
Last month, the Diniz family simplified the legal structure of a half-dozen investment vehicles running the stores, facilitating a potential sale. The length of the rental contracts with GPA as well as the “relative liquidity” of the properties make the portfolio “attractive from any standpoint,” said the second source.
A Península spokeswoman said on Wednesday that the São Paulo-based investment firm had no plans to sell the stores. CPPIB and BR Properties declined to comment. Efforts to reach Brookfield were unsuccessful.
GPA, Brazil’s largest retailer and Carrefour’s archrival, has the right of first refusal for the stores, although neither source expects the company or Casino to exercise it. Diniz’s asking price for the stores equals 11 times annual rent proceeds, which may total about 185 million reais this year, the first source said.
Forbes Magazine estimates Diniz’s fortune at US$4.4 billion.
Both Brookfield and CPPIB, which with about $240 billion in assets is one of the world’s biggest pension funds, are active investors in Brazilian commercial real estate. BR Properties counts Grupo BTG Pactual SA, the largest Latin American investment bank, as a major shareholder.
An alternative to a sale would be bundling the property assets into securities backed by future rent revenue, the sources said. Diniz could raise up to 1.2 billion reais with a placement of the securities, which are known in Brazil as CRIs, the first source said.
Carrefour Chief Executive Officer Georges Plassat recently said teaming up with Diniz could help the retailer strengthen ties with suppliers and accelerate growth plans in Latin America’s largest economy. Brazil is Carrefour’s No. 2 market, generating nearly 38 billion reais in revenue last year.
Following his departure from GPA, Diniz helped turn around Brazilian processed foods company BRF SA as part of a broad diversification effort that has so far paid off. He has also invested in duty-free store chain Dufry AG and Brazilian education company GAEC Educação SA.
By Guillermo Parra-Bernal
(Additional reporting by Marcela Ayres in São Paulo; Editing by Lisa Von Ahn)
(This story has been edited by Kirk Falconer, editor of peHUB Canada)
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