Brazil Pharma Set to Open Market

Brazil Pharma is set to price its IPO tonight and could raise more than BRL400m ($250m) in the first of several Brazilian deals expected to be sold in coming weeks. The retail pharmaceutical operation run by BTG Pactual was heard with a book already covered by Tuesday afternoon, according to an investor. It plans to sell 20m primary shares at BRL16.25-BRL19.25 each, meaning a BRL408m deal if done at the BRL17.75 midpoint and a 15% greenshoe is included. A 20% hot issue is also available. In a sector where the top 5 players have less than 25% of the market, Brazil Pharma plans to use 70% of the proceeds for acquisitions, 10% for developing new products and 7.5% for improving its services. The remaining 12.5% would be used to pay shareholders of Drogaria Rosario and Guararapes, two recently acquired drugstore chains, in performance-related and stock option payouts. Bradesco, BTG Pactual, and Morgan Stanley are managing the sale. Fellow retailers Drogaria Sao Paulo and Paguemenos are also expected to file for IPOs this year. The Brazil Pharma offer kicks off a 2-week period full of Brazilian deals, breaking an almost 2-month lull among issuers from LatAm’s largest market. Health insurance provider Qualicorp is scheduled to follow Monday with an IPO. Tuesday brings an IPO from watchmaker Technos and a follow-on from BR Properties, and Wednesday sees follow-ons from educator Kroton and Energias do Brasil. The week finishes with a follow-on from manufacturer Mahle Metal Leve Thursday and the IPO of E&P operation Perenco.