A number of investment banks are rushing to pitch Brazil’s XP Investimentos for a possible IPO, LatinFinance has heard.
The financial services company, Brazil’s third-largest stock broker, started internal discussions in late 2016 but it has not hired any banks for a potential listing, two equity capital markets sources said.
Private equity firm General Atlantic, which holds a 49% stake in XP, is likely to use an IPO to decrease its stake in the company, both sources said.
“Momentum has been building in Brazilian equities, and the PE firm could capitalize on this in the first half of this year and get a return on investment,” one source said.
XP and General Atlantic did not reply to requests for comment.
An interest rate hike by the US Federal Reserve last month, along with three more potential rate increases in 2017, could push some companies to raise capital “as early as they possibly can,” the second source said.
“On a fundamental basis, the increased rates are making equity more attractive, as the cost of raising debt goes up,” he said. “Brazil is currently offering more value for investors right now, in the context of Latin America, so we should see a strong pipeline in the first quarter.”
Airline Azul picked a group of banks in November and is likely to start investor meetings in the first quarter, while car rental company Unidas is expected to go public before March. Brazilian water company Sanepar priced its re-IPO before the December holiday break.