BTG Closes Heavy IPO Books

BTG Pactual elected to close books ahead of schedule Monday on an IPO targeting as much as BRL3.5bn ($1.86bn), ahead of pricing today. Books were heard Monday afternoon at more than 3x subscribed. Originally, the investment bank, preparing what could be the region’s biggest equity deal this year, was to close books today ahead of pricing this evening. The heavy order level has some optimistic that the deal could price near the top of a BRL28.75-BRL33.75 range. The range indicates a BRL2.98bn-BRL3.49bn deal size, if a 15% greenshoe is assumed. A 20% hot issue is also available if BTG elects to upsize. “They are asking a high price, but the there are a lot of people who just want a piece of this,” says a Sao Paulo-based equity investor looking at the deal, and expecting it to do well. Valuing the shop that is a combination investment bank, private equity manager, asset manager and other functions has been difficult, as there are few, if any, direct comps available. BTG has been heard describing the price range as implying a 2.2x-2.6x book valuation, while some investors and analysts figure the top of the range would mean more than 3x. The bank plans to sell 72m primary units and 18m secondary units, including a greenshoe made up of 10.8m primary units and 2.7m secondary units. The units each consist of one preferred and one ordinary share in Banco BTG Pactual, and one common and one non-voting common share in the BTG Pactual Participations offshore entity. The IPO will feature a Brazilian portion and an international portion done in Amsterdam. The secondary shares are to be sold by 5 investment vehicles representing the holdings of investment firm JC Flowers and the Rothschild, Agnelli and Motta families, who all bought into the bank through a 2010 private transaction. Proceeds will go towards BTG’s expansion, including international growth, strategic acquisitions and growing commercial banking, private equity and providing of specialized financial products. BTG Pactu