Laep IPO Falls Flat

Laep Investments, a Brazilian private equity company that holds Parmalat’s Brazilian assets, struggled to excite investors at its Monday IPO. The offering, initially peddled as 77.83m BDRs at BRL11.50-BRL15.50, was delayed three days and chopped to a BRL8.50-BRL11.50 range to reflect the less than warm reception by investors. It ended up pricing at just BRL7.50. Several domestic and international accounts LatinFinance spoke to said they were not participating, either because the company was small or because the business model was not compelling. Laep, an offshore entity, is proposing to use some of the IPO revenues to build an integrated milk processing company, a project with an unproven track record. UBS Pactual had the books, with underwriters Agora Senior Corretora de Valores and Banco Safra. The Laep flop is further evidence of pushback by investors to lesser quality or off-the-run Brazil names and suggests trouble ahead for some IPOs in the pipeline. Laep specializes in acquisition and turnarounds of Brazilian companies involved in food production and distribution. Laep is based in Bermuda.