Carrefour's Brazil IPO may set the tone for IRB equity sale
The equity sale by the French retailer’s Brazilian unit could gauge investor demand for upcoming Brazil equity offerings
The initial public offering for Carrefour's Brazil unit,
which is scheduled to price later Tuesday, may hold the key for
the next offering in Brazil's equity pipeline from insurer IRB
Early bookbuilding on the Carrefour IPO was progressing
well, ECM bankers said. But some said they were still waiting
on large tickets from accounts in France, the US and
"There are still a few names pending, that will determine
the pricing point," one banker said.
A second banker said investor demand was skewed towards the
lower end of the suggested pricing range, but it could increase
if larger accounts come into the deal, which is expected to be
one of Brazil biggest listings in years.
"There is always value at the lower end, that will be the
main driver," he added.
Carrefour’s IPO on Tuesday evening is expected
to raise more than BRL4bn ($1.26bn). It is also being closely
watched as a potential gauge of investor interest in
IRB’s secondary share sale, which is scheduled to
price on July 27.
Bookrunners have started investor meetings for the Brazilian
reinsurer’s IPO. The all secondary IPO could raise
up to BRL2.48bn if it prices all shares, including the
overallotment, at the top of a suggested range.
Selling shareholders include BB Seguros, Bradesco Seguros
and Itau Seguros, along with Itau Vida, FIP Caixa Barcelona and
Fundo de Garantia de Operacoes de Credito Educativo, or
Leads set a suggested range between BRL27.24 and BRL33.65
per share. The base offering comprises 63.96m secondary shares,
along with an overallotment of 9.59m shares and a hot shoe for
It has been a long road to the market for IRB. The company
originally planned the offering in September 2015
but postponed its
The selling shareholders hope a surge in appetite for
Brazilian stocks over the past year, combined with improved
operating results, will spur demand for the transaction.
IRB posted an adjusted net income of BRL225m in Q1 this
year, up 12.8% on the same period in 2016, according to the
company’s latest financial statements. IRB also
earned BRL1.17bn in reinsurance premiums in Q1 this year, a
19.3% rise on the same period last year.
Bradesco Seguros and BB Seguros each hold 20.4% of IRB,
while FGEDUC, a government fund that finances education, has a
15.76% stake, Itau Seguros 14.7%, Caixa Barcelona 9.85% and
Itau Vida 0.22%.
Bank of America Merrill Lynch, BB Investimentos, Bradesco,
Brasil Plural, BTG Pactual, Itau BBA and JPMorgan are
coordinating the IPO.