BTG Pactual has been tipped as an emerging markets “superbank” after its rapid expansion across Latin America and Africa over the past couple of years. Now the Brazilian investment bank is putting its superhero powers to use in its home market, it appears.
In March André Esteves, BTG Pactual’s billionaire controller, came to the rescue of Eike Batista, offering his crumbling oil and mining empire credit and management services. This week Esteves has swooped in to help power company CPFL Energia, taking the rather unusual decision to guarantee the IPO of its renewable energy unit CPFL Renováveis.
If it sounds too good to be true, it probably is.
The idea that Votorantim Cimentos, Brazil’s largest cement producer, would be able to raise as much as R$10.3bn ($4.9bn) in an IPO on Wednesday always did seem a tad ambitious. Not least after this month’s massive sell-off in emerging market assets that has left the Bovespa down 12.3 per cent this year.
On Tuesday, skeptics of the IPO look like they might be proved right after Votorantim decided to suspend its plans for an IPO.
Another day, another Brazilian company outlining plans for an initial public offering.
On Wednesday, Banco Do Brasil, Latin America’s largest bank by assets, said it was seeking to raise as much as R$12.15bn ($6bn) from the spinoff of its insurance and pension unit, BB Seguridade.
But talk is cheap. Given the lacklustre IPO market in Brazil at the moment — the Bovespa index is down nearly 12 per cent since the start of the year — can Banco Do Brasil pull off what would be the world’s biggest IPO so far this year?
It doesn’t matter how many cancelled or failed IPOs there have been in Brazil over the past couple of years, there will always be one more company willing to try its luck, it seems.
This time around it is Linx. The technology and software provider for retailers published a prospectus on its website on Friday detailing plans to raise as much as R$528m ($259m) in an initial public offering.
What is the dirty not-so-secret secret of Brazil’s capital market? The answer is here in this chart from Dealogic. (see after jump)
It’s not the industry that normally springs to mind when you think of Brazil, but insurance is fast becoming one of the country’s investment hotspots.
Growing income among Brazil’s new middle classes and a tight labour market are boosting demand for health and auto policies. Meanwhile, the vast infrastructure projects underway to get the country ready to host the World Cup in 2014 and the Olympics two years later also offer huge opportunities for insurance companies.