Brazil IPO Market Returns to Earth

The euphoria from BTG Pactual’s highly-demanded IPO doesn’t appear to have rubbed off on the rest of the Brazilian pipeline, with furniture maker Unicasa Industria de Moveis’ BRL425.6m ($226m) debut landing well below its price range. This has been the fate of many smaller deals from the country in the past two years, as buyers disagree with issuers on price, even if the companies are solid and poised to capture the increasing spending power of the middle class. “This is an interesting company, but faces the same problem as many other small IPOs,” says a New York-based equity investor. “BTG was not like anything else. It will continue to be difficult,” he adds. Unicasa sold 9.1m primary shares and 21.3m secondary shares at BRL14.00 each, according to the CVM, versus a BRL16.50-BRL20.50 price range. The total includes a 15% all-secondary share greenshoe. Unicasa is yet another play on rising incomes in Brazil, selling to all of the country’s income brackets through its Dell Anno, Favorita, New and Telesul brands. It is raising funds for expansion, particularly via its New brand targeting the C class. A portion of the primary proceeds is also marked for paying a dividend to shareholders, according to the prospectus. The secondary shares in the sale were offered by controller Alexandre Bartelle and members of the Zietolie family. BTG Pactual, Itau and Santander managed the sale. The deal should be the last equity sale in Brazil for a while, with no other issuers filed.