Bloomberg News

BTG IPO May Raise 4.1 Billion Reais as Market Rebounds

April 03, 2012

Banco BTG Pactual SA, the Brazilian bank led by billionaire Andre Esteves, and its shareholders may raise as much as 4.1 billion reais ($2.2 billion) in an initial public offering as Brazil’s stock market rebounds.

BTG Pactual and shareholders may sell as many as 121.5 million units that represent voting and non-voting shares, which includes the overallotment offering, according to a prospectus published today in Valor Economico newspaper. The units are expected to be priced at 28.75 reais to 33.75 reais each. Banco Bradesco SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the offering.

“The bank may benefit from the current excess of liquidity for equities,” Fausto Gouveia, who helps manage 380 million reais at Legan Administracao de Recursos in Sao Paulo. “The offer will have an interesting demand from foreign and individual investors.”

Brazil’s benchmark Bovespa index rose 15 percent this year as the central bank cut interest rates to 9.75 percent from 11 percent since January, and on signs of growth in the U.S. and renewed optimism Europe will be able to solve its debt crisis.

Itau Unibanco Holding SA, Latin American largest bank by assets, rose 3.9 percent in the same period, while Banco Bradesco SA, the nation’s second biggest lender by market value, gained 4 percent.

Abril Educacao SA was the last company to hold an IPO in Brazil when the Sao Paulo-based education and publishing group raised 371.1 million reais in July. Brasil Travel Turismo & Participacoes SA canceled its offering in March, citing “unfavorable” market conditions. Qualicorp SA shareholders may sell as many as 46 million shares in a secondary offering, according to a prospectus published in today in Valor Economico.

BTG’s stocks will be priced on April 24 and will start trading in Sao Paulo on April 26.

‘Expanding’

The bank plans to use proceeds from IPO to “continue expanding its businesses” and to improve its “funding structure,” according to a preliminary prospectus March 1.

BTG is Brazil’s fastest-growing lender by assets among the 11 biggest banks in the nation. It has reduced the gap behind its closest competitor, Citigroup Inc.’s local unit, to 2.8 billion reais in the year through September 2011 from 10.2 billion reais in September 2010, according to the central bank.

The firm agreed in February to acquire Chilean brokerage Celfin Capital SA for $245 million in cash and 2.4 percent of BTG equity. A year earlier, the lender paid 450 million reais for 51 percent of the voting shares of Banco Panamericano SA, the Sao Paulo-based bank bailed out in November 2010 after suspected accounting fraud.

Repurchase

BTG posted an increase of 70.5 percent in its 2011 net income to 1.92 billion reais, up from 1.13 billion reais the previous year, according to the preliminary prospectus.

Esteves sold Banco Pactual SA to UBS AG in 2006 for $2.6 billion. In 2009, he repurchased the bank for $2.5 billion and merged it with an asset management he founded in 2008, creating BTG Pactual. BTG sold a stake of about 19 percent in December 2010 for $1.8 billion to a group of investors that included the families Rothschild and Agnelli, which controls automaker Fiat SpA. Other investors were J.C. Flowers & Co., Government of Singapore Investment Corp., China Investment Corp. and the Abu Dhabi Investment Council.

‘Recovery in IPOs’

“We already have the conditions for a recovery in IPOs,” Jose Olympio Pereira, co-head of investment banking at Credit Suisse’s Brazilian unit, said March 12 during an event to unveil enhancements to the Bloomberg system. “The Brazilian stock market is showing a strong recovery.”

BM&FBovespa SA, which operates the Sao Paulo stock exchange, has about 40 companies willing to hold an IPO, which could reach as much as $28 billion, Chief Financial Officer Eduardo Refinetti Guardia said in February.

Seabras Servicos de Petroleo SA, the Brazilian unit of oil- rig operator Seadrill Ltd., Cia. de Locacao das Americas and Unicasa Industria de Moveis SA registered plans to sell shares, while tour operator CVC Brasil Operadora & Agencia de Viagens SA and Grupo Isolux Corsan SA’s Isolux Infrastructure canceled their offerings this year.

To contact the reporters on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net; Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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