Spain’s CIE Enters Brazil IPO Fray

Spanish auto parts manufacturer CIE Automotive is planning an IPO for its Autometal unit on Brazil’s stock exchange, according to a filing requesting a listing with the CVM. A prospectus has not yet been lodged, but CIE said in a recent Spanish regulatory filing that it was considering a Sao Paulo equity launch. The deal is aimed at raising funds to boost CIE’s presence in Brazil, Mexico and other markets in the region, by growing Autometal into an Americas-wide company. The new equity hopeful enters a rocky Brazilian market that has been plagued by failure this year. IPO issuers continue to disagree with investors – who remember being sold questionable stories in 2007 – about the value of their companies. Autometal will have to tread carefully with the skittish buyside, which has ample cash to spend on new LatAm equity, but is very sensitive to price. Julio Simoes Logistica was the last Brazil equity IPO this year, raising BRL446.5m on April 19 by pricing 55.8m units at BRL8.0, short of the BRL8.5-BRL9.5 target, well below where the Brazilian logistics provider had started marketing. It closed Monday at BRL8.09 and the range was chopped from an initial BRL10.75-BRL13.75. “Investment bankers and the companies may still want to get a higher price, but as we’ve seen from a number of specific recent deals, they are not getting their way, and that’s a more rational market overall,” says Geoff Dennis, head of global EM equity and LatAm strategist at Citi. “Investors have the memory of how they got burned badly last time,” adds Dennis, speaking in a recent interview.