Caixa resumes IPO plans for insurance business

Caixa resumes IPO plans for insurance business

Capital Markets IPO Equity Corporate & Sovereign Strategy Brazil Latin America

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Brazil's federal savings bank Caixa Econômica Federal said Thursday that it will resume plans to carry out an initial public offering (IPO) for its insurance division Caixa Seguridade, but it did not provide a timeline or indicate the size of the deal.

Caixa Seguridade filed for an IPO on February 21, when the Ibovespa index on B3 stock exchange in São Paulo stood at 114,586 points. It postponed the offering on March 12 as the COVID-19 outbreak spread to Brazil and the stock market dropped 14.8% to 72,583 points, its sharpest single-day drop in 22 years.

Press reports at the time said the IPO of the state-owned insurance company could be worth up to BRL15 billion ($2.79 billion).

Banco do Brasil, Bank of America, Bradesco BBI, Brasil Plural, BTG Pactual, Credit Suisse, Itaú BBA, Morgan Stanley, Santander and Caixa itself are coordinating the offer.

Caixa previously filed for an IPO of Caixa Seguridade in October 2015, looking to raise BRL1.3 billion in a secondary share sale, but it cancelled the offering in March 2016. It revisited the IPO plans in late 2016, but again called of the deal in 2017.

On Friday this week, as the Ibovespa climbed to 102,888 points, local drugstore chain d1000 said it planned to raise around BRL439 million from an IPO after setting the target range at BRL17.00 to BRL20.32 per share. 

d1000 plans to sell 23.5 million common shares, but it could increase the size of the offering by 15%. XP Investimentos and Banco do Brasil are coordinating the offering, according to a preliminary prospectus.

Controlling shareholder Profarma will offload less than 50% of d1000's common shares in the IPO and use the proceeds pay down debt, open new stores and add to working capital, it said in the prospectus.

d1000, which filed for the IPO earlier this month, owns the drugstore chains Drogasmil, Farmalife, Drogarias Tamoio and Drogaria Rosário. Profarma agreed to buy Drogaria Rosário from Brasil Pharma for BRL173 million in 2016. 

Caixa Seguridade and d1000 are on a growing list of companies that plan to list shares in the local stock market, including waterways logistics company Hidrovias do Brasil, pulp and paper producer Irani Papel e Embalagem, high-end real estate developer Lavvi Empreendimentos Imobiliários and homebuilder Even.

In addition, homebuilder You Inc and fashion retailer Grupo Soma have set the target price ranges on their planned IPOs, while private education company Cogna Educação has announced plans to sell shares in K-12 subsidiary Vasta Educação on the Nasdaq exchange in the United States.

Carpark operator Allpark Empreendimentos, which does business under the name Estapar, reopened Brazil's IPO market in mid-May with a BRL300 million deal, followed by a BRL900 million share sale by Grupo SBF, which owns sporting goods chain Centauro.

Other companies in the IPO queue include drugstore chain Pague Menos and environmental services company Ambipar, but mid-sized lenders Banco Daycoval and Paraná Banco, and truck rental company Vamos have not yet resumed delayed deals from March and April.