Brazil Equity Issuers Brave Hostile Markets

The somewhat disappointing IPO of Brazil’s Hypermarcas last week bodes ill for the four issuers hoping to bring deals this week, particularly the smaller deals. The consumer goods company closed Friday down 1.7% at BRL16.70, versus pricing at BRL17.00. On Friday, the Bovespa rose 0.6%. The IPO, priced late Wednesday, involved the sale of 35.8m shares, which raised the company BRL608m. Hypermarcas went out with an initial range of BRL20.50-BRL24.50 through Citi and Merrill Lynch, but had to cut it to BRL17.00-BRL21.00 because of pushback from investors. One buysider says he was encouraged by the fact that it got done at all. But it is unclear how investors will react to others teed up for this week. Anhanguera Educacional, an education company is targeting a follow-on of 17m shares to boost liquidity and replenish coffers for capex and acquisitions. The stock closed Friday’s session at BRL26.00, flat to the previous session and 44% above its March 2007 IPO, which came at BRL18.00 Credit Suisse, Merrill and Santander are leading.