Brazil’s 2012 IPOs in the balance

Euromoney Skew

January 27, 2012

Hopes for a good start to the 2012 equity transactions in Brazil are hanging in the balance, according to market rumours

Two companies are marketing deals – Seabras Servicos de Petróleo and Brasil Travel – and bankers are hoping they fare well to give some much needed momentum to a market that languished in 2011.

Brasil Travel is scheduled to close first – on February 8 – but is thought to be the weaker deal.

“The feedback is not great on Brasil Travel,” says one ECM banker, who is not involved in marketing either deal. “Investors see that as a roll-up of small companies rushing into the market. They also don’t like that Flow Corretora is the financial sponsor and is managing the transaction.”

Brasil Travel is a group of 35 companies involved in businesses such as travel agencies, foreign exchange and travel insurance, and the fragmented structure is not helping investors take a view on the company. The number of entities is also reportedly causing issues with accounting and financial statements.

“[Brasil Travel] is coming to the market cheap – maybe at the right price people are going to jump but my guess is it will price below the bottom of the range,” says the banker.

He is, however, more positive about Seabras – the Brazilian unit of Norway’s Seadrill, which is due to price the day after Brasil Travel.

“People like it,” he says. “This is the right company with the right management in the right sector, so, provided the markets keep on as they are, the probability is it will price within the range.”

For more on Brazil, check out the latest Brazil Guide on Euromoney.com

Brazil’s 2012 IPOs in the balance

Hopes for a good start to the 2012 equity transactions in Brazil are hanging in the balance, according to market rumours

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