Daily Management Review

Sweet Taste For Carrefour, Biotoscana Left By Big Week For Brazil IPOs


07/24/2017




Sweet Taste For Carrefour, Biotoscana Left By Big Week For Brazil IPOs
As a nascent economic recovery and the passage of key economic reforms helped to lure global investors, the busiest week for initial public offerings in Brazil in four years ended last week end on an upbeat note for issuers.
 
In a Friday IPO, 1.34 billion reais ($426.7 million) was raised by Grupo Biotoscana SA, a Colombia-based pharmaceutical firm, and shareholders. Added to this was the raising of 5.12 billion reais by the IPO of Brazil's biggest diversified retailer Grupo Carrefour Brasil SA three days earlier.
 
The IPOs of loyalty program Smiles SA and insurer BB Seguridade Participações SA had raised 12.6 billion reais on April 25, 2013, and last week was marked as the busiest week for the Brazilina markets for local equity offerings since that last IPO offering.
 
Suggesting resilient lawmaker support for his reform agenda despite the nation's political crisis, Brazilian President Michel Temer plans to revamp labor regulations cleared Congress before its winter break and it is amidst that optimistic business and local economic environment that the Brazilian stocks .BVSP and its currency BRBY have outperformed Latin American peers in recent weeks.
 
"With the labor reform approved and Congress in recess, there's a window of opportunity for companies looking to seize on demand for Brazilian equities," said one fund manager who participated in the Carrefour listing.
 
Shares of renewable power firm Omega Geração SA and reinsurer IRB Brasil Resseguros SA are scheduled to debut on the São Paulo Stock Exchange in coming weeks and last week’s successful transactions spell good news for both the companies.
 
Bankers said that Temer's ability to garner support for an ambitious pension code reform when Congress returns in August would be partly responsible for the extension of the current wave of IPO offerings.  
 
And as Brazil slowly emerges from recession against the backdrop of escalating corruption allegations against Temer, companies seeking to tap local equity markets needed to balance risks and returns, bankers said.
 
Foreign investors have traditionally the main buyers of Brazilian IPOs and they have bene forced to remain on the sidelines due to the recent uncertainty in Brazil.
 
Data showed that compared with the 67 percent over the previous decade, before this week, foreigners snapped up just 54 percent of Brazilian IPOs this year.
 
And suggestions and indication that the uneasiness may be starting to abate were available as most buyers in the Biotoscana listing were foreign institutional funds, reported the media quoting people with knowledge of the deal.
 
Investors are wary of IPOs in Brazil as they were stung by a string of deals in recent years that failed to deliver promised returns.
 
Thomson Reuters data showed that returns above Brazil's interbank lending rate was delivered by less than one-third of the 115 IPOs priced since the start of 2007.
 
(Source:www.reuters.com) 






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