Over the first few months of 2017, Brazil’s equity markets hosted its most robust series of deals in years. The car rental company Movida opened the doors in early February with an IPO for 645 million reais ($195 million). Retail chain Lojas Americanas got 2.4 billion reais from a follow-on offering in March. And low-cost air carrier Azul overcame some snags to raise 1.79 billion reais from an IPO in April.
But the infrastructure concessions company CCR surpassed them all with a follow-on offering in February for 4.07 billion reais, the largest such share sale in Brazil for several years. The size and the timing of the offering have earned CCR the awards for Brazilian Corporate with the Best Capital Markets Strategy and Corporate with the Best Equity Market Strategy.
CCR initially intended to sell 221 million common shares to qualified investors in a restricted offering under Brazil’s Rule 476. But it bumped up the offering by 15%, selling 254 million shares for 16 reais apiece. The underwriters — Banco do Brasil, Bradesco, BTG Pactual, Itaú BBA, JPMorgan and Santander — marketed the deal to more than 75 institutional investors in Brazil and qualified buyers overseas.
CCR’s share prices rose 3.97% to 17.28 reais the day after pricing the follow-on offering. Since then, CCR’s stock has climbed as high as 19 reais in mid-May, before returning to around 16.50 reais near the end of June.
The company ended the first quarter with 5.3 billion reais in cash, money that it has already started to spend. CCR shelled out 171 million reais in April to buy Odebrecht’s 15% stake in ViaQuatro and increase its ownership of the São Paulo subway concessionaire to 75%. Then in May, it said it would spend 33.7 million reais for Odebrecht’s part of Concessionária ViaRio in the city of Rio de Janeiro. CCR had previously agreed to spend 108 million reais to double its stake in the toll road concessionaire to 66.7%, but it negotiated a lower price as Odebrecht remained shut out of the loans and capital markets, needing to raise money to pay billions of dollars in fines.
Having acquired Odebrecht’s share in two transportation concessions where the two companies were once partners, CCR has turned its sights to new projects, and also lined up 35.7 billion reais in investments in its transportation concessions portfolio, including 14.8 billion reais for highways and 14.3 billion for urban transit.
It has also returned attention to the local debt market, announcing plans to raise as much as 300 million reais from the sale of three-year debentures, its 10th such issue in Brazil’s capital markets. CCR AutoBAn, a subsidiary that operates 320 kilometers of toll road in the state of São Paulo, could get up 1.6 billion reais from two debentures, with three and five-year tneors.
The local law firm Tauil & Chequer Advogados advised CCR on the equity offering, while Pinheiro Neto was the legal counsel to the underwriters. LF