Banco do Brasil SA hired banks including JPMorgan Chase & Co. (JPM) to sell what would be the largest initial public offering in Brazil in three years, a 5 billion reais ($2.39 billion) deal for its pension and insurance unit, four people with direct knowledge of the matter said.
Banco do Brasil also picked Citigroup Inc. (C), Banco Bradesco SA (BBDC4), Banco Itau BBA, Grupo BTG Pactual and Brasil Plural SA Banco Multiplo, said the people, who asked not to be identified because the decision isn’t public yet. Brasilia-based Banco do Brasil will also be a member of the underwriting team.
Banco do Brazil, Latin America’s biggest lender by assets, is seeking to raise about 5 billion reais by selling at least 25 percent of the pension and insurance unit, the people said. A deal that size would be the largest IPO in Brazil since Banco Santander Brasil SA’s $7.55 billion transaction in July 2009. Banco do Brasil approved the creation of the new division, BB Seguridade SA, yesterday.
BB Seguridade would be listed on BM&FBovespa SA (BVMF3)’s Novo Mercado special segment, the bank said in a regulatory filing last month. The exchange has stricter rules for disclosure and minority shareholders’ rights, and requires companies to have at least 25 percent of their capital traded publicly. The offering would include primary and secondary shares.
Banco do Brasil is seeking to consolidate its insurance businesses into a single company to lower costs, according to the filing. BB Seguridade would control Banco do Brasil’s two insurance joint ventures with Madrid-based Mapfre SA. (MAP) The lender said it plans to expand into dental- and health-insurance brokerages as well.
An IPO for the insurance and pension business creates “a lot of value” for Banco do Brasil, Itau BBA analysts wrote in a report on Nov. 27.
Banco do Brasil SA (BBAS3) expects the deal sometime in the first half of next year, Alexandre Abreu, vice president of the bank’s retail business, said in a telephone interview on Nov. 26. An IPO will show the “hidden value” of the state-run company’s insurance business, and capitalize the unit without taking resources from Banco do Brasil, Abreu said in the interview.
Officials at Banco do Brasil, Citigroup, JPMorgan, BTG Pactual, Bradesco, Itau BBA and Plural declined to comment on the underwriting assignment, and asked not to be identified, in keeping with company policies.
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