Karoon Backs Off Brazil IPO

Karoon Gas Australia has indefinitely postponed the IPO of its Brazilian unit that had been expected Thursday, citing market conditions, according to bankers on the deal. Though Brazil’s Bovespa rose 1.5% Thursday along with global equity markets, selloffs this week on discouraging European headlines appear to have weakened investor appetite. More specifically, bankers on the trade note the aftermarket performance of fellow start-up E&P HRT, which only climbed back to its BRL1,200 offering price during Thursday’s rally, after having traded down as low as 7.4% since its October IPO. After previously postponing for a week, Karoon Petroleo e Gas, was to offer 1.03m primary shares, representing a 31.90% stake, at a range of BRL1,025.00-BRL1,275.00 each, raising BRL1.18bn if priced at its midpoint. Karoon planned to use the proceeds to drill in 5 Peruvian and 7 Brazilian blocks, and can access funds from the parent in the short term, according to a banker on the deal. An eventual stock market listing is still a possibility, he adds. Morgan Stanley is lead coordinator of the deal, with BTG and Credit Suisse as bookrunners. Fellow oil sector debutant Queiroz Galvao is heard waiting until 2011 for its own IPO. Other Brazil equity deals in the pipeline, including Pharmacy Droga Raia and educator Anhaguera, still aim to price deals by the end of the year.