Credit Suisse Group AG (CSGN)’s Brazilian unit is expanding its investment-banking team by 20 percent as it bets that more local firms will hire the company to help them go public or tap capital markets to finance expansion.
Credit Suisse is adding six executives to its investment- banking team of 30 people this year, said Jose Olympio Pereira, head of investment banking in Brazil.
“We continue to grow in Brazil,” Pereira, 48, said during an April 15 interview at Credit Suisse’s offices in Sao Paulo. “We’ve never had such a high market share in IPOs, and we are attracting a growing number of clients seeking ways to finance their growth.”
Companies in Brazil have raised less from initial public offerings since the start of 2011, compared with the same period last year. Zurich-based Credit Suisse was a lead manager in five of this year’s six IPOs, Pereira said. Those six raised a total of 3.64 billion reais ($2.3 billion), Bloomberg data show. At this time last year, six firms had sold shares for 6.39 billion reais, the data show.
Investors this year are being “careful and more selective” in valuing companies amid increasing uncertainty about economic issues such as inflation and steps by the government to control the appreciation of Brazil’s currency, Pereira said.
“We are not seeing the craziness of people buying stocks here at just any price,” he said.
Empresa de Cimentos Liz SA, a cement maker based in Vespasiano, Minas Gerais, canceled an IPO planned for April 4 after demand didn’t meet the company’s expectations.
Four of this year’s six IPOs were priced below or at the bottom of initial estimates, according to data compiled by Bloomberg. QGEP Participacoes SA, the oil company owned by Queiroz Galvao SA, was the biggest IPO this year, selling 79.7 million shares at 19 reais each, 17 percent less than the lowest estimate set by the banks arranging the offer.
Brazilian central bankers’ failure to bring inflation close to their target and the strong real is making the benchmark Bovespa stock index the worst performer in Latin America in the past year, Will Landers, manager of BlackRock Inc.’s $1.06 billion Latin America Fund, said in an interview on April 12 in Sao Paulo.
The Bovespa fell 3.8 percent this year through April 15, led by homebuilders and banks. The MSCI Emerging Markets Index advanced 2.6 percent and the Dow Jones Industrial Average has climbed 6.6 percent this year through the end of last week.
Consumer price inflation in Brazil accelerated to 6.3 percent in March, its fastest pace since November 2008. Brazil aims to keep inflation at 4.5 percent, plus or minus 2 percentage points. The government has implemented a series of measures to curb credit and cut spending to limit consumer demand and slow inflation.
The real has advanced about 46 percent since the end of 2008 as rising commodity prices and investors looking for higher yields offered by Latin America’s biggest economy boost foreign- currency flows. Brazil’s currency on April 8 touched its highest level since August 2008 at 1.5664 per U.S. dollar.
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