BdB Eyes H1 Equity Sale

Banco do Brasil is finalizing plans to issue up to BRL6bn in new shares in the coming month. The deal will likely come to market before the end of H1, according to a finance official. The sale is part of an equity raise of BRL8bn-BRL10bn the bank is conducting whose objectives include bringing BdB’s free float up to the 25% level required by the Novo Mercado. It would also allow government shareholders to maintain their stakes. Brazil’s treasury owns 66%, state pension plan Previ owns 10% and BNDESPar 2.5% of the bank’s total equity. If BdB issues BRL10bn in primary shares, the government entities will look to exercise rights to avoid dilution, and therefore could account for just under BRL8bn of the issue. That would leave approximately BRL2.1bn in primary shares to be placed with public investors. In addition, government entities plan to jointly reduce collective holdings by 5%, placing those secondary shares with the public, resulting in another BRL4bn units being distributed, says the official. BdB has not yet begun to select banks, though it is certain BdB BI, its investment bank unit, will have a lead role. BTG Pactual, which has worked with the bank in the past and is currently advising it on its insurance sector holdings, will also likely have a role. The lead group will probably include at least 3 others, given the size.