Votorantim Cimentos Pushes Brazil IPO Plans to $12.7 Billion

Votorantim Cimentos SA, Brazil’s top cement producer, announced plans to raise as much as $5.4 billion in an initial public offering as the benchmark Bovespa stock index posts its worst start to the year since 2000.

Votorantim will list shares in Brazil and American depositary receipts on the New York Stock Exchange, according to a U.S. regulatory filing yesterday, pushing the total amount of pending IPOs in Brazil to $12.7 billion. Banco do Brasil SA’s insurance unit filed to issue 12.2 billion reais ($6.1 billion) in shares, while the frequent-flyer unit of Gol Linhas Aereas Inteligentes SA is seeking 1.35 billion reais. Alupar Investimento SA plans to raise 1.16 billion reais.

Votorantim Cimentos, founded in 1933 and now the world’s eighth-largest cement producer, will use the proceeds to fund expansion outside of Brazil and for potential acquisitions. It announced the sale plans after the Bovespa (IBOV) dropped 13 percent this year amid slowing growth and government intervention in industries including energy, utilities and banking that crimped earnings. Commodities producers, which account for about 41 percent of the index’s weighting, were among the worst performers.

“If you’re issuing equity in a sector that’s in favor, there wouldn’t be any problem raising capital,” Gabriel Wallach, who manages about $2.5 billion in assets as chief investment officer of global emerging-market equities at BNP Paribas Investment Partners in Boston, said in a telephone interview. “The Bovespa is too focused on resource stocks, and would actually welcome more equity issuance in other sectors.”

The Bovespa is the worst-performing stock index among major emerging markets this year.

Second Half

Votorantim Cimentos’s IPO will probably take place in the second half of this year, people familiar with the matter said last month. Morgan Stanley, JPMorgan Chase & Co., Banco Itau BBA SA, Credit Suisse Group AG and BTG Pactual SA are managing the sale.

Each ADR is equal to one common share and two preferred shares, according to the filing yesterday. The amount is a placeholder that may change.

Votorantim’s press office didn’t reply to a phone call and e-mailed request for additional comment after regular business hours.

Banco do Brasil, Latin America’s biggest bank by assets, said earlier this month its insurance unit BB Seguridade Participacoes SA planned to sell as much as 675 million of its existing voting shares for 15 reais to 18 reais apiece. The IPO would be the largest in Latin America since July 2009, according to data compiled by Bloomberg. Shares are scheduled to start trading on April 29.

Smiles IPO

Gol, Brazil’s second-biggest air carrier by market share, said on April 8 that General Atlantic LLC agreed to invest as much as 400 million reais in the IPO of its frequent-flier unit, Smiles SA. Smiles plans to sell as many as 52.2 million shares priced in a range of 20.70 reais to 25.80 reais for a total of as much as 1.35 billion reais, according to a prospectus.

Alupar, an electric utility, said April 1 it plans to raise as much as 1.16 billion reais in its initial public offering, selling shares for as much as 21.50 reais each. Trading is expected to start on April 24.

Biosev SA, a Louis Dreyfus Holding BV unit in Brazil, raised as much as 814.4 million reais in an initial public offering this month to fund expansion.

In February, Linx SA, a Brazilian information technology company, raised as much as 527.9 million reais in an IPO.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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