Copersucar Pulls IPO

Rough market conditions have forced Brazil’s Copersucar to postpone a potential BRL1.5bn ($940m) IPO, according to those following the transaction, as it struggled to get demand even after lowering the price. Originally out with a BRL14.50-BRL18.50 range that would have resulted in one of the biggest IPOs of the year, the sugar and ethanol cooperative had lowered its target to BRL12.00 Monday, and was heard looking to put together a deal at BRL10.00 Tuesday afternoon. “It was too high of a price they were asking, and the overall market environment certainly didn’t help,” says an analyst at a Sao Paulo-based asset manager who was following the deal. The market had seen a valuation of about 16x 2011 Ebitda at the BRL14.50 level, compared to about 7x for peer Cosan. Almost all Brazilian IPOs this year have priced below, at or near the bottom or their range. LatAm’s agricultural equity issuers have had an exceptionally rough time, with farmland developer AdecoAgro resetting its range in January and BrasilAgro pulling a planned follow-on in May. The 48-member Copersucar was seeking funds to shore up its capital structure ahead of planned investments, including BRL200m to upgrade facilities at the Santos port. BAML, Credit Suisse, Goldman Sachs and Itau were handling the 86.5m primary share and 21.6m secondary share sale, representing as much as a 26% float. 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. With LatAm bond issuers having an encouraging day Tuesday, it remains to be seen how the tricky environment affects Uruguay’s Union Agriculture, scheduled to raise about $230m July 26. In Brazil, Abril Educacao, aiming to IPO Thursday, was heard faring better, with demand more than half covered.