Category: Equity

Brazilian watchmaker Technos has priced a BRL462m ($290m) IPO, scraping the bottom of its price range as a challenging week for Brazilian equity debuts continues. The 10.9m primary and 17.0m secondary shares priced at BRL16.50 each, at the low end of the BRL16.50-BRL20.50 range. The total includes a 15% greenshoe, which went entirely in the secondary portion. The relatively small size and the large number of equity offerings this week acted as headwinds for Technos, according to one New York-based EM equity investor who chose not to participate. “For larger institutional investors, they need to have a liquid stock.” With three IPOs and four follow-ons coming this week, it is a buyer’s market. Fellow Brazilian issuer and health benefits provider Qualicorp priced at BRL13 Monday, missing its BRL16-BRL19 range, while Chilean healthcare company Cruz Blanca disappointed by pricing at CLP500 last week, below its CLP525 floor. Brazil Pharma’s IPO also came in at the low end last week. Technos’ book generated strong interest among domestic accounts, and was evenly split between Brazilian and US/European investors, including institutional accounts from Brazil and new investors from the US and Europe, according to a banker on the deal. The transaction was over two times subscribed. Proceeds from the primary offering will go to finance the company’s growth plan, including potential acquisitions, payment of the acquisition of shares and to repay a loan with HSBC. The secondary shares were sold by Technos’ controlling group, which includes PE firm DLJ (40%) and Brazilian asset manager Dynamo (32%). Credit Suisse, Goldman Sachs and Itau managed the sale. Founded in 1956, the issuer owns the Technos and Mariner brands and also represents the Mormaii, Euro and Seiko lines in Brazil. On tap are follow-ons from Kroton tomorrow and Mahle-Metal Leve Thursday, as well as an IPO from Perenco Friday.

JBS has authorized a share buyback program of up to 37.5m shares with the aim of increasing shareholder value, the company says. The schedule and exact number of shares to be acquired has not been disclosed. The Brazilian beef company’s stock climbed 0.39% Monday to close at BRL5.11.

Parana Banco approved a buyback program for 630,000 shares, or 2.7% of the company. The program is scheduled to end December 30, with the maximum price paid for the shares not to exceed their listing price on the bolsa.

A busy week for Brazilian equity issuance got off to a shaky start Monday after Qualicorp priced a BRL1.08bn ($677.6m) IPO well below the range. The Brazilian health benefits provider priced at BRL13 per share against a range of BRL16-BRL19. The company sold 27.2m primary shares and 56.2m secondary shares held by Carlyle and Jose Seripieri Filho, which respectively hold 69% and 31% stakes in the company. “People were saying it looked a little expensive,” says New York-based EM equity investor, who cited valuation levels and uncertainty over Qualicorp’s business model as reasons for not participating. The deal raised only BRL353.6m for the company, which had been looking to garner as much as BRL476m if it had priced at its midpoint. Qualicorp’s difficulties may be another sign that investors are starting to suffer from deal fatigue. Only last week Chilean healthcare provider Cruz Blanca’s IPO also failed to live up to expectations when it priced at CLP500 a share after setting a CLP525 minimum, investors say. This comes after Brazil Pharma came at the low end of its BRL16.25-BRL19.25 range last week, drawing only BRL17.25. Qualicorp’s investor meetings had been well attended with crossover interest looking to gain exposure to the Brazilian heathcare sector. Most of the book came from the US, with significant interest from US healthcare investors. Carlyle only acquired its stake in 2010, in a deal that valued the company at $1.2bn. Qualicorp, founded in 1997, recorded Ebitda of BRL127.5m in 2010, up from BRL56.4m in 2009.Bank of America Merrill Lynch, Bradesco, Credit Suisse and Goldman Sachs managed the sale. Proceeds from the primary portion are slated for general corporate purposes, such as the leasing or acquisition of equipment and material, as well as geographic expansion.

Technos’s book was heard to be oversubscribed Monday afternoon ahead of its planned IPO today, but investors were become increasingly selective as they braced for a string of equity deals this week. The Brazilian watchmaker is offering 10.9m primary and 13.4m secondary shares at BRL16.50-BRL20.50 each. At the BRL18.50 midpoint, that would mean a BRL517m ($323m) size, assuming the exercise of a 15% greenshoe. A 20% hot issue is also available. A New York-based EM equity investor thought the IPO looked small and was likely to pass, but believed it should generate interest among domestic accounts. Investors are somewhat spoilt for choice given the abundance of Brazilian equity issuance due this week, including follow-ons from BR Properties, Kroton and Mahle, as well as IPOs from Perenco and Qualicorp. Barclays, Credit Suisse, Goldman Sachs and Itau are managing the sale. The company generated BRL59.1m in Ebitda in 2010. Proceeds from the primary offering will go to finance the company’s growth plan, including potential acquisitions, payment of the acquisition of shares and to repay a loan with HSBC.

Brazilian equity issuers are back in full swing and are set this week to bring 6 deals, which together could raise in up to BRL4.3bn ($2.7bn) and truly break what has been a brief lull in activity. ECM Bankers foresee continued demand for offerings despite some complaints about broader issuance fatigue. With commodities plays on the Bovespa unlikely to offer much near-term upside and a chunk of the index containing less-than-stellar companies, investors are on the hunt for quality Brazilian stocks that can still provide some capital gains, not mention diversity, a Sao Paulo-based banker says. After Brazil Pharma helped to reopen the market last week with a BRL466m IPO, health insurance provider Qualicorp is preparing to price today an IPO that could raise BRL1.46bn if done at the midpoint of a BRL16-BRL19 range. Carlyle Group and one company official are selling 45.5m secondary shares, to go with the 27.2m new shares to raise funds for acquisitions in the health plan area and general purposes. Bank of America Merrill Lynch, Bradesco, Credit Suisse and Goldman Sachs are managing the sale. Tomorrow is also scheduled to see a follow-on from BR Properties that is targeting about BRL700m, as well as an IPO from watchmaker Technos that would raise BRL517m at the midpoint of a BRL16.50-BRL20.50 range. Education company Kroton is eyeing a follow-on of about BRL450m Wednesday, and Mahle-Metal Leve should follow with a more than BRL350m selldown of secondary shares owned by its German parent Thursday. An IPO from E&P operator Perenco Brasil could fetch BRL750m-BRL850m on Friday to close out the week. Energias do Brasil is also set to hold an approximately BRL750m follow-on sale of Energias de Portugal shares July 7.

EDP – Energias do Brasil has moved the date of its planned follow-on to July 7 from June 29. The Brazilian electricity company refiled its prospectus with the local stock exchange and expects to raise around BRL750m ($471m) based on the stock’s closing price of BRL37.59 on June 15. The bookbuilding process will begin July 4 and end July 6, for the sale of 19.9m shares. A 10% greenshoe is also possible. The Portuguese utility EDP would reduce its 49.1% stake in EDB to 35.3% if the sale includes the 10% overallotment, with the free float increasing to 48.8% from 35.0%. Espirito Santo, Itau, Morgan Stanley and Santander are leads. EDP said in March that it aims to raise EUR500m though asset sales this year.