SAO PAULO, Nov 22 (Reuters) - Brazilian state-controlled company Petróleo Brasileiro SA will seek a valuation of up to 22 billion reais ($6.8 billion) for its fuel distribution unit in what is expected to be the country's biggest initial public offering of the year.
Petrobras, as the company is known, will offer a 25 percent stake in its BR Distribuidora SA unit in an IPO set to price on Dec. 13, according to a regulatory filing.
The offering could grow to a 33.75 percent stake in the distribution unit if the company sells all additional and supplementary allotments.
At the high end of a suggested price range of 15 reais to 19 reais per share, Petrobras would fetch as much as 7.5 billion reais with the offering, a key part of its plan to sell assets and reduce the biggest debt load among major oil companies.
The local investment banking unit of Citigroup Inc will act as lead underwriter. Bank of America Corp, Banco do Brasil SA, Banco Bradesco SA, Banco Itaú BBA SA, JPMorgan Chase & Co, Morgan Stanley and Santander Brasil SA will also underwrite the transaction.
The long-awaited BR Distribuidora IPO would cap a revival in equity listings in Latin America's largest economy, where the benchmark stock index hit a record high last month.
Renewed demand for emerging market assets, investor confidence in President Michel Temer's efforts to balance the budget and a nascent economic recovery have fostered demand for Brazilian assets following the deepest recession in a century.
The BR Distribuidora IPO is one of several expected to close in the final weeks of 2017 as companies rush to avoid expected market volatility ahead of a wide-open presidential campaign next year.
In August, Petrobras injected 6.3 billion reais of fresh capital into BR Distribuidora in a bid to clean up its balance sheet and attract investors. The move solved a long-standing dispute with state-controlled power utility Centrais Elétricas Brasileiras SA, which had been the biggest hurdle for an IPO.
Last month, Petrobras announced that BR Distribuidora swung to a profit of 620 million reais in the first nine months of the year, compared to a loss of 367 million reais in the same period of 2016.
$1 = 3.26 reais Reporting by Bruno Federowski and Luciano Costa; Writing by Bruno Federowski