Familiar Story as Brazil Sees Year’s First IPO

Locamerica has priced a BRL314m ($167m) IPO, Brazil’s first of the year, continuing last year’s trend and landing below its range. The vehicle fleet rental agency sold 34.9m shares, including a 15% greenshoe, at BRL9.00 each, versus the BRL11.00-BRL14.00. Brazilian debut issuers, often seen by investors as strong companies well-positioned to ride the country’s domestic growth story, appear to still be in disagreement with buyers about pricing. “The vehicle rental sector has been recovering this year, and government stimulus measures should be beneficial. This is a sector with strong prospects, and fleet outsourcers are able to grow during both periods of economic strength and of contraction,” says a Sao Paulo-based equities analyst covering the sector. The Locamerica shares were heard sold 50% to Brazilian investors, 35% to US investors and 15% to European accounts. The sale included 22.7m primary shares, including the greenshoe, and 12.2m secondary shares owned by Banco Votarntim’s BV Empreendimentos e Participacoes private equity fund. Locamerica plans to use 60% of the proceeds for expanding its fleet and the remainder for working capital. Banco do Brasil, Banco Votorantim, Bank of America Merrill Lynch, BTG Pactual and Itau managed the transaction. Two more Brazilian IPOs, BTG Pactual and Unicasa, are both scheduled to price next week.