Category: Equity

Private education company Abril Educacao has launched its IPO, targeting more than BRL500m ($319m) when it prices July 21. The Brazilian publisher and operator of schools plans to sell 18.6m units at BRL21.75-BRL26.75 each, indicating a BRL518m size at the BRL24.25 midpoint and including a 15% greenshoe. A 20% hot issue is also available. Both the greenshoe and the hot issue would consist of secondary units to be sold by members of the controlling Civita family and private equity funds managed by BR Investimentos and Banif. A unit consists of one ordinary share and two preferred shares. Abril Educacao, part of the media conglomerate Grupo Abril, plans to use 63% of the proceeds for acquisitions, 27% for paying off debt, and 10% for opening new schools and improving old ones. Abril says it would be the first listed education company in Brazil with a focus on basic and pre-college education. Listed education specialists Kroton, Anhanguera and Estacio have all tapped the equity markets recently to fuel rapid growth in one of the country’s hottest sectors, but they have more of a focus on the college and continuing education levels. Abril also specializes in book publishing, technical education, preparation for public sector exams, and plans to enter the fields of language education and distance learning. It booked Ebitda of BRL102.5m ($64.5m) in 2010, up from BRL85.8m ($54.0m) in 2009, according to its prospectus. Bradesco, Credit Suisse, Itau and JPMorgan are managing the transaction.

Energias do Brasil plans to hold a follow-on equity sale today, which would raise BRL801m ($501m) at Wednesday’s closing price. The 19.9m all-secondary sale represents parent Energias de Portugal’s move to reduce its stake in the Brazilian distributor and generator under a plan to raise EUR500m this year through asset sales, as it tries to keep debt levels under control. EDB shares closed at BRL36.60 Wednesday, dropping 1.82%, and have lost 8.8% since the announcement of the deal May 16. “This is a good moment to sell in the sense that Brazil is very popular and expected to grow,” says a Europe-based analyst covering EDP. “However, everyone knows they need to get cash and they are in a hurry, and this may be putting pressure on the selling price.” The Portuguese utility EDP will reduce its 49.1% stake in EDB to 35.3% if the sale includes a 10% greenshoe, with the free float increasing to 48.8% from 35.0%. Banco Espirito Santo, Itau, Morgan Stanley and Santander are leads. EDB operates hydroelectric and wind generation assets, as well as distribution companies.

Sugar producer Tereos International has postponed indefinitely its equity follow-on, owing to market conditions. The BRL450m-BRL600m ($280m-$370m) issue was designed to help the company reach the 25% free float required by local regulators after it first listed its shares in Brazil in August. The unit of the Europe-based Tereos Group was formed after its European and Asian assets were combined with Brazilian subsidiary Acucar Guarani. The issuer is still in discussions with the BM&FBovespa about how to reach the free-float threshold, but expects to go through with a share sale in the future. Proceeds were to be used for acquisitions and greenfield expansion in LatAm and other regions where Tereos operates. BTG Pactual, Credit Agricole, Morgan Stanley and Natixis had been hired as leads. Tereos has bioenergy and sugar operations in Brazil and Africa, and says it is the third largest sugar producer in Brazil. Tereos shares closed at BRL2.97 Tuesday. Brazilian equity issuance has struggled this year, with a recent wave of offerings last week seeing deals price at the bottom or below their ranges, or get pulled entirely.

Brazil’s Perenco e Gas do Brasil Participacoes postponed its IPO Friday, becoming the third LatAm issuer to pull a deal in what was a brutal week for the region’s equity markets. The Brazilian unit of UK-based oil exploration company Perenco, which cited market conditions for the decision not to move forward, had planned to sell 0.4m primary shares at BRL1,550-BRL2,000. That would have meant a BRL829m ($533m) sale if it had come at the BRL1,775 midpoint and a 15% greenshoe had been included. Investors cited the company’s dearth of producing assets as one of the main reasons why they lost interest in the offering. A busy week for equities, with follow-ons from Mahle, Kroton and BR Properties, had created a buyers’ market for LatAm investors, who were able to call the shots on pricing, an investor says. Mexican low-cost airline Interjet and Brazilian sugar and ethanol cooperative Copersucar also announced last week that they would be pulling or postponing their offerings after seeing Qualicorp miss the bottom of its IPO range by almost 19%, and Technos scraped the bottom of its pricing targets. Perenco, which operates in 16 countries worldwide, had planned to use the funds to develop its 5 blocks in the Espirito Santo Basin and acquire additional blocks. About a third of the raise was slated for acquisitions, including new government auctions. BTG, Itau and Morgan Stanley were leads.