(Agencia CMA Latam) - Even with the political uncertainty in Brazil, the local financial market should have in 2017 the largest number of initial public offerings (IPOs) since 2010. However, the total number of listings will be smaller than initially expected, according to players interviewed by CMA News Agency.
While small capital outflows indicate that the Brazilian stock markets are rebounding after two years of an economic crisis, total listings in the local stock exchange this year will likely be far less than the 20 and 25 operations expected at the start of 2017.
So far, there have been four IPOs in Brazil - Carrefour, Movida, Azul and Hermes Pardini. According to the documents submitted to Brazil's Securities and Exchange Commission (CVM), renewable energy company Omega Gera??o and reinsurer IRB Brasil are expected to launch prices for their primary and secondary offerings later this week.
According to a Terra Investimentos' analysis, the operations of Omega and IRB Brasil may surpass R$ 4 billion. Also, BR Distribuidora, Camil Alimentos, and Elektro - the last one controlled by Neoenergia and Iberdrola - could come later this year.
For the Vice President of the Brazilian Association of Private Equity & Venture Capital (ABVCAP), Francisco Sanches, it is fair to expect up to four listings in the second half of this year.
"About 14 operations were expected since the beginning of the year, and not all of them came true. There was a new factor midway - the public and notorious case of [Joesley Batista] recording against [President Michel] Temer. It scared everyone. Of these 14, four occurred, two did not, for their own reasons, and another one was postponed," said Sanches.
Temer was formally charged with passive corruption at the end of last month after an audio recording of an informal late-night meeting between him and JBS's owner Joesley Batista went public in May. During the conversation, the president points a former aide as someone who would help Batista to interfere in a legal dispute between JBS and Petrobras.
The chairman of the Brazilian Association of Publicly Held Companies (Abrasca), Alfried Pl?ger, says that the current political uncertainty does not favor listings in the stock exchange. "If there is a change in the Brazilian Presidency, the next president also will not have solid support. This will have a very large impact on external investors and operations in general," Pl?ger said.
Analysts consider that to avoid disturbing IPOs the government must keep the economic team headed by Finance Minister Henrique Meirelles, regardless if Temer remains in office.
"In conversation with colleagues, there is not much spirit. They look for predictability, transparency and political security when investing, and there is nothing of those three in the Brazilian market at the moment," said Pl?ger. He points to the other side: while the market celebrates the few capital-opening operations, nobody talks about companies going private. "Only last year there were more than ten."
Even so, a part of the market celebrates the return, even if incipient, of listings. "It is possible that the electric sector will be in the spotlight due to changes in the regulatory framework proposed by the government. Many investment opportunities will arise, including potential shares offering by Eletrobras' subsidiaries," said another source.
by Agencia CMA Latam
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