Abril Educacao Latest to Miss Target

Private education company Abril Educacao became the latest LatAm IPO to price below range in what has been a difficult summer for new issuance. The spinoff of publisher Grupo Abril priced a BRL427.8m ($272.5m) IPO at BRL20 per share, an 8% discount to the bottom of its BRL21.75-BRL26.75 range. Abril Educacao priced 18.56m primary shares and a 15% greenshoe consisting of secondary units sold by members of the controlling Civita family and private equity funds managed by BR Investimentos and Banif. “It’s one of the best deals out there,” says a participating New York-based equity investor. “They’re in a sweet spot in the education sector. They’re the best one positioned in the K-12 sector. They have a pretty good management.” However, equity investors who opted out of the deal say that there are already plenty of buying opportunities among listed companies thanks to the decline in the Bovespa. Accounts also cited the recent difficulties among LatAm IPOs, including the cancellation of Copersucar’s IPO Tuesday, as reasons not to invest. The book was heard 1.5x oversubscribed, with much of the interest coming from large local pension funds. A unit consists of one ordinary share and two preferred shares. Abril Educacao, part of the media conglomerate Grupo Abril, plans to use 63% of the proceeds for acquisitions, 27% for paying off debt, and 10% for opening new schools and improving existing ones. The issuer claims it would be the first listed education company in Brazil with a focus on basic and pre-college education. Listed education specialists Kroton, Anhanguera and Estacio have all tapped the equity markets recently to fuel rapid growth in one of the country’s hottest sectors, but the three focus more on the college and continuing education segments. Abril also specializes in book publishing, technical education, and preparation for public sector exams. It also plans to enter the fields of language education and distance learning. It booked Ebitda of BRL102.5m in 201