China's direct investment in Brazil has soared to a projected US$12bn this year, making it the highest investor in the country for 2010.  The flood of investments marks a major shift in focus for China, which pumped only US$82m into Brazil in 2009 and only US$213m between 2001 and 2009.

This year, State Grid – China's biggest electrical utility – paid US$1.7bn for seven Brazilian electricity transmission companies (advised by Milbank Tweed, Uría Menéndez and Pinheiro Neto Advogados) and Sinochem paid US$3.1bn for a 40% stake in the Peregrino oil field (advised by Baker Botts, Vinson & Elkins, Demarest and NautaDutilh).

“Brazil is now one of the hottest energy countries in the world and China definitely has its eye on its resources. The broken monopoly in the country makes the region an extremely attractive target for foreign companies,” said Zhang Libin, former Baker Botts partner who advised on the Sinochem transaction. Zhang has since moved to local firm Broad & Bright as partner.

Brazil has said it now aims to diversify the range of products it exports to China. Currently main exports are soya beans (for tofu), iron ore, cellulose and fuel.

The increasing number and size of Sino-Brazil deals will mean a shift in focus for PRC and Brazilian legal advisors. “There will continue to be more Chinese investments into Brazil, especially in energy assets. This will draw more international firms into Brazil and also drive more PRC firm alliances with Brazilian firms. PRC firms with international law capacity will also start to tap into the region and drive their advice inthat direction,” said Zhang. ALB

 

Recent Sino-Brazilian deals
  • Sinopec and China Development Bank purchases two oil blocks in Petrobras for US$3bn
  • Sinopec and China Development Bank lends Brazil US$10bn
  • Wuhan Iron & Steel Company builds US$5bn steel mill in Brazil
  • China State Grid purchases seven Brazilian transmission companies from Plena Tranmissoras for US$1.7bn
  • Sinochem purchases 40% stake in Statoil Peregrino for US$3bn

 

    Brazilian firms in China
    • Duarte Garcia, Caselli Guimarães E Terra Advogados (Beijing)
    • Noronha Advogados (Shanghai)

    PRC and Brazilian firms in international alliances

    Alliance
    PRC firm
    Brazilian firm
    International Alliance of Law Firms
    • JC Master Nanjing
    • Nilton Serson Advogados Associados
    • Martorelli E Gouveia Advogados
    World Law Group
    • King & Wood
    Terralex
    • AllBright
    • Hylands,
    • Liu Shen & Associates
    • Wang Jing & Co
    Lex Mundi
    • Jun He
    • Demarest e Almeida
    Meritas
    • Grandfield
    • Felsberg e Associados
    TAGlaw
    • GoldenGate
    • Jade & Fountain

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