Brookfield Business Partners closes acquisition of Odebrecht Ambiental

Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN), together with institutional partners, has completed the previously announced acquisition of a 70% controlling stake in Odebrecht Ambiental S.A. from Odebrecht S.A., for US $908 million (all figures in US dollars).

Odebrecht Ambiental was incorporated in 2008 after a spin-off of assets from the environmental division of the Odebrecht S.A. Odebrecht Ambiental operates in water and sewage, utilities and waste treatment segments.

Odebrecht Ambiental will be renamed BRK Ambiental.

FI-FGTS, the investment arm of Brazil’s Employees’ Severance Guarantee Fund, continues to own the remaining 30% interest in the business.

The investment is comprised of a payment of $768 million to the seller and approximately $140 million in additional capital contributed at closing to fund working capital requirements and support expected growth of the business. In addition, Brookfield Business Partners and its institutional partners expect to purchase a direct interest in related assets held through a joint venture for $116 million.

Brookfield Business Partners’ share of the capital invested at closing was $340 million for an ownership interest in the business of 26%, and its share of the direct asset purchase is expected to total $44 million. A future payment to the seller of up to R$350 million (approximately $115 million at the current exchange rate) may be made if the business achieves certain performance milestones over the three years following closing.

“We are pleased to have completed the acquisition of the largest private water distribution, collection and treatment company in Brazil, and are encouraged by the number and scale of growth opportunities we see for it moving forward,” said Cyrus Madon, CEO of Brookfield Business Partners. “We believe BRK Ambiental can capture a growing share of the water and sewage improvements planned in Brazil over the next two decades, supporting strong and stable returns for Brookfield Business Partners.”

photo credit: Odebrecht Ambiental

Ted Liu

Ted Liu, M.Sc. (Mining, Queen's), MBA (Finance, Toronto), is the Editor of Private Capital Journal, CanadaMetals.ca, TechWire.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, having most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA).

Ted is the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, Canada's most sophisticated and advanced all private capital and public market financing database.