Brasil Travel, which was to be the first Brazilian IPO of the year, has been pulled from the market.
As the pricing date of February 8 approached, the company responded to the lack of demand by lowering the price to R$1,000 per share from the offer range of between R$1,250 to R$1,650. The price was then finally lowered as far as R$850, before the company and bookrunner Credit Suisse pulled the sale citing lack of demand.
According to Reuters, the company also changed the terms of the sale to allow existing shareholders to buy up to 50% of the offering, up from an initial 15% threshold.
As Euromoney first reported on 2 February, investors had raised serious issues about the deal since its launch.
Questions have been asked about the complex structure of 35 companies and the accounting and financial statements supplied to prospective investors.
Audited numbers had been added to 'rough' numbers and so the utility of the totals are being questioned.
Investors also told Euromoney that the company has provided no clear incentive plan about how to align the various companies' performance and maximise corporate earnings.
Investors also didn't like the fact that Flow Corretora is both the financial sponsor and is managing the transaction.
The failure of Brasil Travel to price is another blow to the standing of Brazil’s equity market. Many of the 2011 crop of IPOs also failed to hit the pricing range. It may also damage the reputation of the deal's leading bookrunner, Credit Suisse, which was unable to price this transaction despite the aggressive last ditch efforts to secure investor demand.
In the last few years Credit Suisse has been one of the most active banks in Brazil in bringing new companies to the market
