Hypermarcas Launches Equity Follow-On

In contrast with this week’s other Brazilian equity deals, consumer brands holding company Hypermarcas is heard drawing a bid for its follow-on, scheduled to price March 31. “Hypermarcas is going well,” says a Brazil-based equity investor looking at the deal. The company plans to issue 43.5m shares and will grant underwriters a 6.5m share greenshoe. It also reserves the right to issue an additional 8.7m shares if demand is strong enough, and early indications point to strong interest. All told, the 58.7m shares would raise the company BRL1.3bn, assuming Thursday’s BRL21.92 closing price. Proceeds are earmarked entirely for M&A, the company says in a filing. Citi, Credit Suisse, Bofa-ML and Itau BBA are leading. Investors apparently like the company’s series of well-executed acquisitions of the past month. The stock has performed well since a 2008 IPO and investors also appear to like the fact that management has delivered on promises. Eike Batista’s oil services and ship building unit OSX raised 62% less than targeted through its Wednesday IPO, a deal widely expected to be one of the biggest LatAm equity issues of 2010. And Renova, the Brazilian renewable energy specialist, failed to price its IPO Wednesday, the scheduled date for the deal.