Brazil's Azul raises over $570m in IPO
The Brazilian airline moved ahead with its equity offering and order books were up to seven times oversubscribed
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
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,
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
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
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
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