Brazilians close ECM year on low note
Via Varejo became the latest Brazilian equity issuer to price a deal below its range. Elections and the World Cup could make for a challenging 2014.
Brazilian retailer Via Varejo became the
latest Brazilian equity issuer to fall short of expectations
Thursday. The operator of businesses including the Casas Bahia
and Ponto Frio chains had been aiming for more than 3.9 billion
reais ($1.22 billion), and
raised 2.85 billion in an equity follow-on. Shares priced
at 22.00 reais, 7.60 reais below the range.
CVC Brasil Operadora e Agencia de Viagens
came below the range when raising 621 million reais in its
IPO earlier this month. The pattern of disagreement between
buyers and sellers stretches back to the end of the 2009
financial crisis. Only large IPOs from visible issuers, such as
BB Seguridade this year and BTG Pactual last year, have
seemed able to escape, with a few notable small exceptions,
such as IT provider Linx.
A number of issuers have elected to put
off deals until the beginning of 2014. In recent months this
has included transportation services providers Unidas, Sacar
and Ouro Verde. At least Unidas has indicated it will
look to try again next year. Fras-le, a Brazilian maker of
vehicle parts that is part of the Randon group, has
filed to raise funds through a follow-on equity offering.
If there is access for Brazilians next year, it will likely be
shifted toward the beginning of the year, ahead of the World
Cup and presidential elections.
Challenges for Brazil in 2014 might mean
more visibility for transactions coming from the rest of the
region. Issuers from Mexico, Peru, Colombia and Chile are
already have taken an uncharacteristically high portion of the
issuance in 2013. Brazilians’ $14.2 billion ECM
volume had accounted for about 38% of the region’s
$37.1 billion through Friday, according to Dealogic data.
Mexicans accounted for 32% and Andeans 25%.
A series of Andean follow-ons is set to round out the
year in late December. Banco de Bogotá was raising $517
million-equivalent in a
transaction that should close next week. Parent Grupo Aval
was due to open its own
$1.25 billion-equivalent sale as soon as next week,
partially to raise funds to participate in the Banco de
Bogotá transaction. Latam Airlines is set to close the
rights offering period for a $963 million-equivalent
follow-on next week.LF