Copersucar IPO Lowers Pricing amid Turbulence

Brazil’s Copersucar has lowered price guidance on its IPO scheduled to price today, and is now aiming for a total size of about BRL1.49bn ($944m). The issuer is heard getting a solid anchor order at BRL12.00, and is now planning to build the book there, ducking under its original BRL14.50-BRL18.50 range. It had been aiming for more than BRL2.0bn. The sugar and ethanol cooperative is offering 86.5 primary and 21.6m secondary shares, meaning a BRL1.49bn total sale if done at the new price and a 15% greenshoe is included. A 20% hot issue is also available. “This is not an attractive proposition at those levels,” a Sao Paulo-based analyst says of Copersucar. He estimates a valuation of 16x 2011 Ebitda at the bottom of the original 14.50 range, compared to 7x for larger listed competitor Cosan, and notes he would see the valuations becoming more attractive at around BRL10.00.This year has been particularly cruel to companies attempting IPOs, and the past weeks have been challenging for would-be issuers of all types. The Bovespa lost 1.1% Monday, after shedding 3.4% last week. The 48-member group is seeking funds to shore up its capital structure ahead of planned investments, including BRL200m to upgrade its Santos port. The company would have about a 26% float after the sale, assuming the greenshoe is added. BAML, Credit Suisse, Goldman Sachs and Itau are leads. Copersucar handles sales, marketing, storage, distribution and other services for its member group of independent Brazilian sugar and ethanol producers, as well as non-exclusively for another 50 non-members, in the states of Sao Paulo, Parana, Goais and Minas Gerais.