Equity Issuers Ebb and Flow

The second and third weeks of January have seen a slew of new equity filings for IPOs and follow-ons (FO), as well as updates to filings made in the final weeks of December. The flow, which until last week included 5 IPOs and 4 follow-ons, is indicative of a strong conviction on the part of issuers, say bankers. However, as of Thursday, 2 companies planning follow-ons appeared poised to pull out. Metalfrio, the commercial refrigerator and freezer maker, was heard close to pulling plans to raise around BRL370m in a follow-on scheduled for January 28. Bankers away from the deal suggest investor interest may be cool, though there is also the possibility of parallel M&A discussions. Metalfrio, which hired Credit Suisse, Itau and Morgan Stanley to lead the FO, has not filed a statement on plans to alter the course of the deal, scheduled to price January 28. M. Dias Branco meanwhile filed a statement saying its controlling shareholder, whose shares account for most of the planned secondary offer, suspended the sale, scheduled for February 4. It cites market conditions and timing as the reason. The Bovespa dropped around 4% last week to 66,220 and is down around the same amount since the start of the year after spending some of January above 70,000. Executives close to the process say the move is based on a decision to issue at a better multiple after having further grown the company during the first part of 2010. M. Dias Branco is looking to achieve a Novo Mercado listing by October 2010 and will likely return to market by then, say executives close to the process. Itau BBA and BofA-Merrill were slated to lead.