Azul raised BRL1.79bn ($570.6m) in its initial public
offering, shrugging off last week’s delays from Brazil’s securities watchdog
(CVM), which suspended the transaction.

The airline offered 72m preferred shares at BRL21 apiece,
the midpoint of a marketed price range. Bookrunners, however, immediately
exercised a hot shoe and increased the transaction to 82.8m shares, according
to three equity capital markets sources.

Azul’s dual-listed IPO comprised 27.6m American depositary
shares (ADSs), which equal three preferred shares. The ADSs priced at $20.06
apiece, one ECM source said.

Order books were up to seven times oversubscribed, a second
ECM banker told LatinFinance. Approximately
65% of the book comprised US long-only investors, 10% came from outside the
Americas and the rest from Chilean and Brazilian accounts, he added.

Both ECM bankers are confident the IPO will be upsized by a
further 20%, under a green shoe option, taking the total offering size to
roughly $643m. Leads have 30 days to exercise this.

Azul’s market capital was weighed at $8.3bn after the
offering priced, a third source added, valuing the airline at a 4% premium to
rival carrier Gol.

The selling shareholders included Saleb II, Star
Sabia, WP-New Air, Azul HoldCo, ZDBR, Bozano, Maracatu, Morris Azul, Trip
Investimentos, Trip Participacoes and Rio Novo Locacoes.

Citi,
Deutsche Bank and Itau BBA were lead coordinators on the offering, while Banco
do Brasil, Bradesco, JPMorgan, Raymond James and Santander were also worked on
the IPO. The banks set the pricing range between BRL19 and BRL23 per preferred share and $18.02 and $21.81 for each ADS.

Azul’s
IPO received a minor scare last Thursday when Brazil’s CVM suspended the
offering for up to 30 days. The airline uploaded documents to the website RetailRoadshow, which included projections on
the returns of Azul’s investment in Portuguese carrier TAP, which were not
included in the prospectus, CVM said.

CVM also said Azul provided confidential
information on the price per share and the demand for the IPO to local media
outlets, including O Estado de S. Paulo, UOL Economia and Brazil
Journal.

Azul shelved plans for an
IPO in August 2015, due to volatility in foreign exchange rates. Brazil’s real
depreciated approximately 24% against the dollar in the first half of 2015.

After
the failed IPO attempt, Azul sold a 23.7% stake to
China’s HNA Group in November 2015 for $450m. It also bought $100m in
convertible securities from airline TAP Portugal in March 2016 as part of
the agreement with HNA. The securities could be converted into preferred
shares, equal to a 40% stake in the Portuguese carrier.