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Votorantim Cimentos Said to Suspend $3.7 Billion IPO

Votorantim Cimentos SA (VEBM11), Brazil’s biggest cement producer, suspended an initial public offering of as much as $3.7 billion, according to two people familiar with the decision.

The company postponed the share sale because of market conditions, said the people, who asked not to be identified because the decision hasn’t been officially announced. Votorantim Cimentos’s press office in Sao Paulo declined to comment on the IPO.

Volatility in stock and currency markets has increased since the company started its promotional tour for investors earlier this month, making it impossible to price the units, each of which represent three shares, within the range of 16 reais ($7.34) to 19 reais Votorantim Cimentos was seeking, one of the people said. The company isn’t in a rush, the person said.

The Brazilian stock exchange had net outflows of 5.1 billion reais in foreign investments this month, according to BM&FBovespa SA. Foreigners typically acquire more than 50 percent of Brazilian IPOs.

Votorantim’s decision was probably the result of stock-market deterioration caused by Brazil’s weak economic growth, rising inflation and government interventionism, Felipe Rocha, an analyst at brokerage Omar Camargo, said by phone from Curitiba.

Stock Drop

The benchmark Ibovespa index fell 19 percent this year, as economists lowered their estimates for gross domestic product. The economy expanded 0.9 percent in 2012, capping the slowest two-year expansion in a decade.

“All of this has made investors so concerned and cautious this year,” Camargo said. “Brazil’s image is so hurt right now.”

Votorantim Cimentos, based in Sao Paulo, and its parent company, Votorantim Participacoes SA, said in a May 29 regulatory filing that they would offer 400 million units for listing in Sao Paulo or their equivalent in American depositary receipts in New York. The company had planned to use the proceeds for expansion outside Brazil and potential acquisitions.

It’s the first IPO to be postponed in Brazil this year, after eight initial share sales were suspended or scrapped last year, data compiled by Bloomberg show. Companies have raised $7.3 billion in IPOs in Brazil this year, compared with $1.8 billion for all of last year.

To contact the reporters on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net; Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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