BB Seguridade IPO Tops $5bn

Banco do Brasil’s BB Seguridade unit has priced a BRL11.48bn ($5.74bn) IPO near the top of the range and has used full overallotment options to give LatAm its largest IPO in almost four years. The insurance business carve-out is offering 675m secondary shares at BRL17.00 each, according to the CVM, above the midpoint of the BRL15.00-BRL18.00 range. The total includes a 15% greenshoe and full use of the 20% hot issue option. The sale was heard getting at least 2x in orders. As with most Brazilians daring to IPO, the business is widely considered attractive, with most of the questions leading up to the sale having revolved around the valuation. “This is a good company with solid numbers. Bank insurance is growing more quickly in the last few years than independent insurance companies,” says a Sao Paulo equity portfolio manager looking at the deal. Banco do Brasil’s pitch is that the “bancassurance” model uses the state-controlled bank’s wide reaching client channels to sell insurance products and brokerage services. Premiums sold in Brazil were up 13.4% in 2012 from 2011, the bank says, and insurance penetration in Brazil, at 1.7%, is well below developed markets. Banco do Brasil has consolidated its insurance businesses into the single BB Seguridade entity to lower costs, increase scale and be better prepared for expansion and competition with the likes of Bradesco. BB Seguridade controls Banco do Brasil’s two insurance joint ventures with Madrid-based Mapfre, and the bank has said it also plans to also expand into dental and health insurance brokerages. The entity directly controls two holdcos, one responsible for insurance brokerage activities and the other for all other insurance operations. The transaction should result in a 29% free float. Banco do Brasil, BTG Pactual, Bradesco, Citi, Itau, and JPMorgan were global coordinators on the sale, with Brasil Plural and Banco Votorantim as joint bookrunners. It is the largest IPO in LatAm since Santander Brasil raised