Category: Equity

Joao Fortes Engenharia plans to raise BRL227.5m ($112m) through a share offering to existing holders, it says. The Brazilian residential developer will offer 35m shares at BRL6.50 each through June 22. Holders may buy up to 35% of the value of their holding. Shares closed at BRL8.19 Thursday.

Celulose Irani plans to sell both primary and secondary units in an upcoming equity follow-on, it says, hiring Itau and Credit Suisse to manage the sale. The maker of paper, packaging and resins is raising funds for its expansion plan, which involves increasing pulp and packaging material production capacity and obtaining the required infrastructure. Irani does not detail the amount of funds to be spent through 2015, but says additional bank loans, likely through BNDES will be necessary in addition to the equity sale. It previously communicated that it would sell additional units, each composed of 1 common and 4 preferred shares. The sale is seen almost as an IPO, given the relative illiquidity of the outstanding shares. It does not give an indication of size or timing. A launch this week, however, suggests a late June launch and July pricing, joining several other issuers looking to complete deals before the traditional July-August holiday period. Irani common shares closed at BRL1.41 ($0.69) Monday and preferred shares at BRL1.51.

Brazil’s new equity issuance pipeline is growing even as its market deals with global volatility and disappointing economic indicators. The Bovespa rebounded a bit Monday after suffering in the previous week, and for some, sagging prices might represent attractive entry points. Despite the volatility, domestic structural changes still have investment banks optimistic about the possibilities. “Asset management in Brazil is maturing, and there is more of a risk profile for smaller-cap issuers. This is a positive. We lack in Brazil a lot of industries, such as services, not represented on the exchange. If there is a market for them it will be healthy,” Christian Egan, global head of equities at Itau, tells LatinFinance. As interest rates drop, fund managers must work harder to find returns, and he notes that local demand has topped 50% of the books on some deals. There is a universe of small companies in Brazil that previously lacked appetite from investors, he explains. Trends toward specialized and small cap funds abroad should ultimately mean greater foreign participation as well, Egan says. For the moment, however, Egan says investors will need to see productivity numbers improve, noting his bank expects growth to pick up in the second half. International investors, as always, should still be needed to drive large deals. “Even BTG Pactual is down 20% [from its IPO price in April]. That doesn’t foster a lot of confidence, so [new issuance] will be challenging,” says a New York-based portfolio manager reviewing some of the recently-announced transactions. Recent growth numbers weren’t great and there is concern again about bank lending, he adds, while on the positive side inflation appears to be under control and retail sales were better than expected. CPFL Renovaveis, Suzano and Brazil Pharma have recently filed deals that should come in towards the larger end of the scale. LDC Bioenergia, Vix Logistica, Manabi and Celulose Irani have also joined the pipeline in the

Brazil’s JBS has launched a 1-for-1 exchange of up to 149.7m of its shares for new shares of its Vigor Alimentos dairy spinoff, it says. At a price of BRL7.96 per JBS share, the offer open through June 15 could be worth BRL1.17bn ($584m). Bradesco is advising JBS in the process. JBS shares closed at BRL5.87 Friday.

Celulose Irani is preparing to raise funds through a follow-on equity sale, it says. The maker of paper, packaging and resins plans a primary and secondary sale of units, each composed of 1 common and 4 preferred shares. It does not give additional details, and a prospectus has not been filed. Irani common shares closed at BRL1.38 Thursday and preferred at BRL1.51.