Biosev Lands Guaranteed IPO

Brazil’s Biosev priced a BRL814m ($407m) IPO Monday, finding success in its second attempt to debut on the Bovespa thanks to put options that guarantee investors do not lose money in the first year. The Brazilian sugar, ethanol and bioenergy unit of Louis Dreyfus Commodities is selling 53.7m primary shares at BRL15.00 each, according to the CVM, with put options at BRL0.25 each, according to people following the sale. The total assumes the exercise of a 15% greenshoe. The share price had been fixed prior to the sale, with the options priced Monday night versus a BRL0.01-BRL2.00 range. The issuer will take in proceeds of BRL805m, and place the option funds in a separate account. About BRL9m was raised from the option sale, according to the CVM, indicating 37m options were sold. The options are issued by a sister LDC entity and exercisable in July 2014 at BRL16.57. The exercise price represents the BRL15.00 offer price plus the expected appreciation of the DI through July 2014, guaranteeing that investors don’t lose money on the deal in the first 14 months. The inclusion of a put option of this type is a first for the Brazilian equity market, and allowed the issuer to price after pulling its first try in July last year. Biosev plans to spend 70% of the proceeds on expansion, including upgrades, acquisitions and greenfield projects, and the remainder to pay down some BRL200m in USD and BRL-denominated debt due 2014-2024. BTG Pactual, Banco do Brasil, Bradesco, Itau and JPMorgan managed the transaction. The bank lineup added BTG, who replaced Santander and Banco Votorantim from the previous attempt. Biosev pulled the original deal on the night of pricing in July 2012, unable to find demand within its price range. Next up in the Brazilian ECM is Brazil Hospitality Group. It will target a BRL400m-plus follow-on Thursday.