Ache Itches to Go Public

Amid growing investor appetite for an IPO from the still untapped Brazil pharmaceutical industry, Ache, one of the country’s leading drug companies, is heard in advanced talks to go public. Brazil’s largest investors, including portfolio managers at Itau-Unibanco Asset Management (IUAM) and Bradesco Asset Management (BRAM), say a substantial, well-run company from that sector would draw significant interest. “Pharmaceutical companies all over the world are listed but here in Brazil we still don’t have any public ones,” Herculano Anibal Alves, who heads BRAM’s $17bn equity arm, tells LatinFinance. “Our [pharma] sector here is relatively large and there’s also the opportunity for consolidation,” he adds. However, Alves notes that he does not know of specific names considering a float. The Brazil pharmaceutical sector, which includes a robust generic drugs industry, is by far LatAm’s largest. Its sales grow at an estimated 17% a year, with Ebidta margins of close to 40% a year, according to an industry insider. There are a handful of large private entities including EMS, Medley and Ache. Ache Laboratorios Farmaceutico reported 2008 Ebitda of BRL304m, up 4% year-on-year. Net indebtedness meanwhile fell to BRL42m from BRL105m the previous year, and the company claimed a 6.3% market share. “[Ache is] very close to being ready to do an IPO,” says the person close to the firm. The process to go public has been under discussion for 3 years, he adds. “[The company] would rather do it at the right time rather than rush out to the market,” says the executive. He adds that a lead bank has not been chosen, but bankers away from the process say BTG Pactual has the Ache mandate. BTG equity executives could not be reached for comment.