December 13, 2013
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%.