Qualicorp Misses Target

A busy week for Brazilian equity issuance got off to a shaky start Monday after Qualicorp priced a BRL1.08bn ($677.6m) IPO well below the range. The Brazilian health benefits provider priced at BRL13 per share against a range of BRL16-BRL19. The company sold 27.2m primary shares and 56.2m secondary shares held by Carlyle and Jose Seripieri Filho, which respectively hold 69% and 31% stakes in the company. “People were saying it looked a little expensive,” says New York-based EM equity investor, who cited valuation levels and uncertainty over Qualicorp’s business model as reasons for not participating. The deal raised only BRL353.6m for the company, which had been looking to garner as much as BRL476m if it had priced at its midpoint. Qualicorp’s difficulties may be another sign that investors are starting to suffer from deal fatigue. Only last week Chilean healthcare provider Cruz Blanca’s IPO also failed to live up to expectations when it priced at CLP500 a share after setting a CLP525 minimum, investors say. This comes after Brazil Pharma came at the low end of its BRL16.25-BRL19.25 range last week, drawing only BRL17.25. Qualicorp’s investor meetings had been well attended with crossover interest looking to gain exposure to the Brazilian heathcare sector. Most of the book came from the US, with significant interest from US healthcare investors. Carlyle only acquired its stake in 2010, in a deal that valued the company at $1.2bn. Qualicorp, founded in 1997, recorded Ebitda of BRL127.5m in 2010, up from BRL56.4m in 2009.Bank of America Merrill Lynch, Bradesco, Credit Suisse and Goldman Sachs managed the sale. Proceeds from the primary portion are slated for general corporate purposes, such as the leasing or acquisition of equipment and material, as well as geographic expansion.