Banco Pactual SA, the top manager of stock offerings in Brazil, expects a surge in initial share sales by yearend as interest rates fall, said Rodolfo Riechert, a partner at the investment bank.
``We continue to be very optimistic for the Brazilian stock market,'' Riechert, whose bank managed five of Brazil's seven IPOs in 2004, said in an interview in Sao Paulo. ``A lot of companies have already filed with the securities regulators for IPOs, and that gives us a positive outlook from here on.''
The Rio de Janeiro-based bank expects five more companies to register for initial public offerings this year in addition to the four that already have filed -- TAM SA, Brazil's second-biggest airline, utility Energias do Brasil SA, J.C. Penney Co. unit Lojas Renner SA (LREN3) and toll road operator Obrascon Huarte Lain Brasil SA. Three companies had IPOs already this year.
Brazilian companies, which revived initial share sales in 2004 after a two-year pause, are seeking to raise capital on the stock market even as this year's IPO shares underperform Brazil's benchmark Bovespa stock index.
The index fell 9.6 percent since reaching a record high March 7. Shares of Internet retailer Submarino SA have dropped 13 percent since the company's March IPO, and shares of apple producer Renar Macas SA (RNAR3) fell 34 percent since they began trading in February. Localiza Rent a Car SA (RENT3), which had its IPO May 23, closed today unchanged from its IPO price.
Unibanco Asset Management, Brazil's sixth-biggest asset manager, forecasts the benchmark Bovespa index may rise 13 percent by year-end as interest rates fall in the second half of 2005, said Demosthenes Madureira de Pinho Neto, head of the unit of Uniao de Bancos Brasileiros SA.
Brazilian steel, pulp and paper stocks should lead gains in the Bovespa, said Pinho Neto in an interview in Sao Paulo. The Bovespa index rose 2.7 percent today to close at 26,639.83, the highest in two months.
``It wouldn't be unthinkable for the Bovespa to reach the end of the year at something close to 30,000,'' Pinho Neto said in an interview in Sao Paulo.
Brazil's central bank last month lifted the benchmark lending rate to a 19-month high of 19.75 percent in a bid to slow inflation. The rate will come down as inflation eases, Pinho Neto said. Brazil's central bank targets a 5.1 percent yearend inflation rate, down from 8 percent in April.
``With interest rate declines that should begin taking place in the second half of the year we will have a very positive trend for the equity market,'' said Pinho Neto, a former central bank director and finance ministry official, in Sao Paulo.
Brazil's National Investment Banking Association also forecast the number of new share sales this year will surpass the seven in 2004, said Luiz Fernando Resende, vice-president and head of the capital market department of the association.
``There will always be demand for good companies, with good corporate governance practices, transparency and fair price,'' Resende said in a phone interview from Sao Paulo. ``The window will stay open and the market will be a buyer'' in the second half of the year.
Banco Nossa Caixa SA, Brazil's 10th largest bank, may be the next stock listed in the so called Novo Mercado, a section of the Sao Paulo bourse with stricter disclosure rules and where only voting shares can be traded. The bank, which is controlled by the Sao Paulo state government, plans to sell shares in the market in the second half of the year.
``The moment when a share sale is launched in the local and international markets affects the result of the sale,'' said Eduardo Guardia, finance secretary of Sao Paulo state, in a press conference May 24. ``Still, I have no doubt of the success of this transaction that we will be launching because I am confident of the story we're telling.''
Software maker RM Sistemas Ltda. is preparing to list shares next year to raise between $15 million and $20 million to finance acquisitions.
``If we were ready to sell shares today the drop of the index wouldn't stop us,'' Eduardo Couto, RM's commercial director, said in a phone interview. ``We consider our numbers are good enough to attract investors even when the market volatility increases.''