(Bloomberg) October 5, 2011 – JPMorgan Chase & Co (JPM)’s Gavea Investimentos Ltda., a private-equity and hedge fund set up by former Brazilian central banker Arminio Fraga, agreed to buy a 5 percent stake in Odebrecht SA’s oil and gas unit to become the third-largest shareholder. 

The investment in Odebrecht Oil & Gas will be Gavea’s largest holding, Fraga said at a press conference in Rio de Janeiro today, without providing financial terms of the deal.

“Gavea will help us enhance our financial analysis, give us access to international markets and knowledge of what is going on in the world,” Roberto Ramos, the head of the oil and gas unit, told reporters at the event. “They will help us identify trends in order for us to get the right strategy.”

Odebrecht is expanding its oil and gas services unit to supply rigs and platforms for Petroleo Brasileiro SA and other producers that are tapping the largest crude discoveries in the Americas in more than three decades. Petrobras, as Brazil’s state-run oil producer is known, plans to spend $224.7 billion in five years, the oil industry’s largest investment program, as it exploits ultra-deep offshore deposits that may cost five times more to develop than major fields in Mexico.

JPMorgan’s Highbridge Capital Management agreed last year to buy 55 percent of Rio de Janeiro-based Gavea, which manages more than $7.2 billion of investments. Fraga is a former fund manager for billionaire George Soros.

‘Main’ Petrobras Partner

“We intend to be the main partner for Petrobras and the foreign companies operating in Brazil,” Ramos said.

Odebrecht Oil & Gas will invest about $2.5 billion through 2014 and is seeking opportunities outside Brazil, including Angola and the Gulf of Mexico, he said. The company expects to generate more than $1 billion in revenue next year, Ramos said.

“The petroleum industry has so much room to grow that we see it as a genuine long-term investment that’s not so exposed to the economic cycle,” Fraga said.

Gavea will use its Fund 4 to buy the stake, he said, adding that this will be the second investment in Odebrecht after buying a stake in the company’s real estate unit. Gavea previously invested in OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, and later sold its stake, he said.

Temasek Holdings Pte, Singapore’s state-owned investment company, owns about 14 percent of Odebrecht Oil & Gas, making it the second-largest shareholder, said Marcelo Odebrecht, president of Odebrecht SA. Temasek paid $400 million for the stake, the company said in an October 2010 statement.

By Juan Pablo Spinetto and Lucia Kassai