Technos IPO Comes at Low End

Brazilian watchmaker Technos has priced a BRL462m ($290m) IPO, scraping the bottom of its price range as a challenging week for Brazilian equity debuts continues. The 10.9m primary and 17.0m secondary shares priced at BRL16.50 each, at the low end of the BRL16.50-BRL20.50 range. The total includes a 15% greenshoe, which went entirely in the secondary portion. The relatively small size and the large number of equity offerings this week acted as headwinds for Technos, according to one New York-based EM equity investor who chose not to participate. “For larger institutional investors, they need to have a liquid stock.” With three IPOs and four follow-ons coming this week, it is a buyer’s market. Fellow Brazilian issuer and health benefits provider Qualicorp priced at BRL13 Monday, missing its BRL16-BRL19 range, while Chilean healthcare company Cruz Blanca disappointed by pricing at CLP500 last week, below its CLP525 floor. Brazil Pharma’s IPO also came in at the low end last week. Technos’ book generated strong interest among domestic accounts, and was evenly split between Brazilian and US/European investors, including institutional accounts from Brazil and new investors from the US and Europe, according to a banker on the deal. The transaction was over two times subscribed. Proceeds from the primary offering will go to finance the company’s growth plan, including potential acquisitions, payment of the acquisition of shares and to repay a loan with HSBC. The secondary shares were sold by Technos’ controlling group, which includes PE firm DLJ (40%) and Brazilian asset manager Dynamo (32%). Credit Suisse, Goldman Sachs and Itau managed the sale. Founded in 1956, the issuer owns the Technos and Mariner brands and also represents the Mormaii, Euro and Seiko lines in Brazil. On tap are follow-ons from Kroton tomorrow and Mahle-Metal Leve Thursday, as well as an IPO from Perenco Friday.