Investors Scoop up Redecard Follow-On

Citi has managed to divest 90.3m shares it owns in Brazilian credit card company Redecard at a minor discount to Tuesday’s closing price of BRL24.90. The shares are being offered at BRL24.50, which represents a 1.6% haircut to the last session’s close, and an even smaller discount to the stock’s average trading price over the past several months. Redecard said in a filing earlier this month it would offer 82m shares held by Citi at BRL23.00. But as the stock traded up, Citi opted to increase its sale to 93m shares. Not including a greenshoe, which is likely to be fully exercised given the book was heard more than 4x oversubscribed, the US bank was set to raise BRL2.28bn, or $1.01bn. Itau Unibanco and Citi are leading the offering. Redecard’s existing shareholders Itau and Unibanco – now part of the same institution – also announced they plan to exercise an option to acquire 24m shares to give them a 50% stake plus one additional share. They will pay the same BRL24.50 for the shares. Investor enthusiasm for the deal far surpassed the expectation of many involved in the deal, which, some weeks back, was characterized by uncertainty and skepticism that investors would be willing to put money to work. “This shows that good companies can raise cash even in today’s equity market,” says one Brazil-based banker of the first public equity deal in more than 7 months.