Previ, the $23 billion pension fund of the Banco do Brasil, Rio de Janiero, wants to get more out of its steel investments. Brazil's largest fund is forging plans to restructure its $2 billion worth of steel-sector investments to maximize their value.
Previ is searching for an investment bank to advise it on just what steel mill properties it should buy, sell or swap, said Previ investment director Joao Bosco Madeira da Costa.
Previ, whose formal name is Caixa de Previdencia dos Funcionarios do Banco do Brasil, has a direct or indirect stake in all of Brazil's biggest steel mills. Its biggest holding: a 24% share in the Acos Expeciais de Itabira (Acesita) mill, Latin America's largest specialty steelmaker, controlled by a Previ-led pension fund consortium. Previ also has a 15% stake in the Usinas Siderurgicas de Minas Gerais (Usiminas) steel mill and a 11% stake in the Cia. Siderurgica Nacional, Brazil's two largest steelmakers. The fund also has an indirect stake in Brazil's third and fourth biggest steelmakers, the Cia. Siderurgica Paulista (Cosipa), and the Cia. Siderurgica Tubarao.
Previ's moves come amid the global trend toward consolidation within the steel sector.
Previ's steel-restructuring plans are among the various factors that appear to have boosted the value of steel mill stock. From early January to mid-March, preferential shares of Cosipa, Usiminas, and Acesita have risen 115%, 48% and 84% respectively, in a period where the average exchange-traded share price climbed 16%.