Brazil increased to 30 percent the combined stake foreigners can hold in Banco do Brasil SA, the state-controlled lender that’s Latin America’s biggest by assets, to boost liquidity and the share price.
Investors outside the country had reached the previous limit of a combined total of 20 percent of outstanding shares, the Brasilia-based lender said today in a regulatory filing. That limit was raised from 12.5 percent in September 2009.
Broadening the pool of shareholders will increase liquidity, which would give Banco do Brasil a higher weighting in the benchmark Ibovespa index, Chief Financial Officer Ivan Monteiro said in an interview. Investors who try to mimic the performance of the index will have to increase their holdings, which may boost a share price Monteiro said is undervalued compared with the bank’s peers.
“It’s a very healthy move that will have a positive impact on Banco do Brasil’s shares,” Pedro Galdi, chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a telephone interview. “It will attract foreign investors.”
Banco do Brasil rose 1.2 percent to 28.67 reais in Sao Paulo at 5:06 p.m., compared with a 1.3 percent drop for the 73-company Ibovespa benchmark index.
Investors outside Brazil owned about 19.4 percent of the company as of June, according to the bank’s website. The Brazilian government is the biggest shareholder, with about 59 percent.
BM&FBovespa SA, which operates the Sao Paulo exchange, will start in January weighting stocks in the Ibovespa primarily by market value instead of trading volume.