It has been a questionable start to the year’s equity transactions in Brazil. Two companies are marketing deals – Seabras Serviços 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.
Travel not recommended
Brasil Travel is scheduled to close first – on February 8 – but is thought of as 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 it 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.