Hypermarcas Cedes 25% in IPO

Hypermarcas reopened the 2008 IPO market Wednesday with a highly anticipated offering – the region’s first IPO of substantial size since December. The seemingly weak result, however cast some doubt on the strength of the market going forward. The manufacturing and branding company priced its IPO late Wednesday night at BRL17.00, a 25% discount to the midpoint of the originally targeted range of BRL20.50-BRL24.50. That means that without the greenshoe, the company grossed BRL609m. “The fact that they were willing to go down to BRL17.00 after launching it at a minimum of BRL20.50 starts things off on the wrong foot between the seller and its minority shareholders,” says one local portfolio manager who did not participate on the deal. Still, Hypermarcas may have achieved a decent valuation. “At BRL17.00, I still think its rich,” admits the investor, noting the equity value to 2008 Ebitda multiple is 10x, which is substantially better than many comparable companies. Merrill Lynch and Citi led.