Gafisa Follow-On Hits Resistance

Gafisa, which opened books Thursday on an equity follow-on offering, is heard already facing pressure to offer a healthy discount on the shares. “Investors that want to participate are saying they need [a] 10% [discount] and the ones that are hesitating are asking for 15%,” says a US-based hedge fund manager with $500m in assets. The remark is clearly not representative of all potential buyers, but it suggests the company may be in for some haggling. Gafisa says it wants to sell 74m shares and will offer underwriters a 15% shoe of 11.1m units. At Thursday’s closing price of BRL13.06, that could add up to BRL1.1bn, while a 10% discount would result in something closer to BRL1.0bn. Itau BBA, JPMorgan and Votorantim are joint leads on the deal, scheduled to price March 23.