Investors Picky on Brazil Equity Issuance

Despite the selloff that has seen the Ibovespa sink 5.2% in the past 4 sessions, equity investors have started 2010 with a favorable, albeit cautious, view on Brazil. Three US-based portfolio managers say they are overweight stocks in the biggest LatAm economy, having either maintained or increased allocation. However, appetite is uncertain for the 3 deals slated to price in the coming 7 sessions, including an IPO. “It’s going to be company-specific, and whatever I buy will have to be better than what I’m holding now,” says Todd McClone, who oversees $6bn LatAm equity for William Blair & Co. A concern for McClone is the abundance of paper coming from certain sectors, including homebuilding. Follow-ons scheduled include Inpar and PDG Realty, both specializing in homebuilding. The IPO is for Aliansce Shopping, the mall operator that kicks off the season with an up to BRL1bn deal Wednesday via Itau BBA and BTG Pactual. March 2, TAM miles program Multiplus is scheduled to price an IPO worth over BRL1bn. Will Landers, who manages over $7bn in LatAm equities at BlackRock, says his preference is for a minimum deal size of $300m-$500m. He also likes sectors that are under-represented in the Bovespa, including those with businesses tied to infrastructure or that can benefit from growth expected from the Olympics and World Cup. Foodmaker M. Dias Branco pulled a small offering scheduled for February 4, while Metalfrio, which was set to bring a similarly-sized deal, is also heard mulling withdrawal.