Small Deals Exposed to Investor Pushback

On Wednesday, Les Lis Blanc, a clothing retailer, is set to bring its IPO via Merrill and Morgan Stanley. The 26m share offering seeks a price in the BRL10.50-BRL12.50 range. At the midpoint, it would result in a BRL300m offering – a risky size given investors’ distaste for small illiquid deals. Also on Wednesday, Copasa seeks a follow-on of 16m secondary shares via Banco do Brasil and Citi. Copasa closed at BRL24.80 Friday versus the BRL31.58 it closed at prior to the deal’s announcement in November. And Thursday, Gerdau is set to bring a jumbo $2bn follow-on offering of ADS and Bovespa shares via Itau BBA and JPMorgan. Of all the deals out there, Gerdau is most likely to attract interest because of its size, sector and the company’s performance in general.