Brazilian Small Cap Launches IPO

Brazil’s Senior Solution has launched an IPO targeting BRL80m ($41m), according to regulatory documents, and is scheduled to price March 6. The IT provider specializing in the financial industry plans to sell 3.4m primary shares and 2.1m secondary shares, at BRL13.50-BRL15.50 each, implying a BRL80m deal at the midpoint. The total assumes the exercise of a 15% greenshoe. A 20% hot issue is also possible. The selling shareholders in the secondary portion include BNDES and private equity fund Stratus. Senior Solution plans to use 70% of the proceeds for acquisitions, noting that it has about 40 businesses identified as targets. It also plans to use 20% for working capital and 10% for product development. The issuer booked BRL7.3m in Ebitda during the first three quarters of 2012, after taking in BRL5.9m in the full-year 2011 and BRL0.8m in 2010. Banco Votirantim and Banco do Brasil are managing the sale, to be done on the Bovespa Mais small cap index. The issuer will hope to follow in the footsteps of retail-focused IT provider Linx, which built a 20x book for its BRL528m IPO earlier this month.