Loading ...News - Brazil IPOs May Resume in 2009, Itau’s Nishikawa Says
5 year Bovespa: Bovespa is due to recover in 2009
Dec. 23 (Bloomberg) - Brazilian companies may resume initial public offerings during the second half of 2009 as investors look for attractive investments, Itau Corretora Chief Executive Officer Roberto Nishikawa said.
“There are many companies interested, but the market isn’t prepared yet,” Nishikawa said in a Bloomberg Television interview in Sao Paulo. “If the market opens up again, you have a big opportunity for companies to enter the market through IPOs.”
Share offerings have dried up in Brazil, with only four companies going public this year as a global financial crisis sent equity prices tumbling. Spiking commodity prices and a growing Brazilian economy led to a record 64 IPOs in 2007, when companies raised more than 70 billion reais ($29.5 billion) through initial and additional stock sales, according to data from exchange owner BM&FBovespa SA. Foreign investors, who have pulled more than 24 billion reais from Brazil’s equity market this year, last year bought more than two-thirds of shares sold.
Initial offers coming to market will likely depend on increased liquidity in Brazil’s market, Nishikawa said.
Walter Mendes, director of Latin American investments for Itau Corretora’s parent, Banco Itau Holding Financeira SA, said last year that companies would have to sell at least 1 billion reais in shares to have liquidity that’s considered attractive.
Canceling Sales
Thirty-one companies canceled share sales this year, with another 12 scrapping plans to sell Brazilian depositary receipts, according to the country’s securities regulator, known as CVM.
“With this crisis you have investors becoming much more conservative and staying out of the equity market,” Nishikawa said. With global interest rates remaining low next year, “when the market calms down people will be looking for alternative investments, and Brazil is very attractive.”
Brazil’s Bovespa index is down 41 percent this year, halting a five-year winning streak and heading for its worst performance on record. The index reached a record 73,516.81 in May, boosted by the most heavily weighted companies, state- controlled oil company Petroleo Brasileiro SA and the world’s biggest iron-ore producer, Cia. Vale do Rio Doce.
Source: Bloomberg.
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