Cosan IPO Flounders

Cosan raised just $1.05bn with its US IPO and Brazilian follow-own, significantly less than the desired $2.00bn, a projection based on Cosan’s $18.71 closing price June 25. Cosan’s stock has tumbled nearly 45% in the past three months and 25% alone in the last week. The issuer sold 100m class A shares in the US and class A BDRs in Brazil at $10.50 a share. The underwriters have a 15% over allotment option, after which the company will launch an offer to minority shareholders to exchange existing Class A shares of Cosan SA, traded in São Paulo, for BDRs. In late July, Cosan created a new class of common shares for minorities – the Class B series 2. This stock comes with voting rights but subjects minorities to the same lockup period as the controlling shareholder and will convert to Class A shares if sold. The Class A shares will not have voting rights but more liquidity. The offshore Cosan Ltd will delist Cosan SA in coming months as liquidity migrates to Cosan Ltd, according to analysts. Credit Suisse, Goldman Sachs and Morgan Stanley led the equity offer.