Brazilian companies are lining up to complete initial public offerings totaling as much as $28 billion as foreigners resume buying stocks from the country after demand plunged last year, said Eduardo Refinetti Guardia, BM&FBovespa SA’s chief financial officer.
IPOs in 2012 will probably exceed last year’s 6.51 billion reais ($3.79 billion) as investors return to Brazil after withdrawing funds in 2011 amid concern that global economic conditions would deteriorate, Guardia said in an interview in London yesterday. About 40 companies are ready to go public with IPOs averaging $600 million to $700 million as market conditions improve, he said. BM&FBovespa is the operator of Latin America’s biggest securities exchange.
“We saw investors beginning to return to Brazil,” said Guardia. “January was a very good month with net inflows every day, so it’s an indication of investors’ increasing confidence in increasing their risk exposure.”
International investors’ demand for emerging-market stocks has increased as Greece moves closer to a bailout package and the U.S. economy show signs of improvement. Greek Prime Minister Lucas Papademos will meet today with political leaders to negotiate terms required for 130 billion euros ($172 billion) of aid. U.S. unemployment fell unexpectedly to 8.3 percent in January and the Federal Reserve estimates the world’s largest economy will grow 2.2 percent to 2.7 percent this year.
The last IPO to be priced in Brazil was Abril Educacao SA in July. At least 11 companies, including sugar-trading cooperative Copersucar SA and soybean producer Los Grobo SA, postponed or canceled equity offerings in Brazil last year.
Net foreign purchases of Brazilian equities soared to 7.2 billion reais in January, compared with 401 million reais a year earlier, according to data from BM&FBovespa. In 2011, overseas investors withdrew 1.4 billion reais from Brazilian stocks, leading to an 18 percent slump in the Bovespa index, the third-worst performance out of 18 major global gauges tracked by Bloomberg.
“The valuations are very attractive” in Brazil as a result of last year’s decline, Guardia said. “That’s one of the reasons investors are coming back to Brazil.”
Seabras Servicos de Petroleo Ltd., the Brazilian unit of Bermuda-based oil-rig operator Seadrill Ltd., said last month that it plans to raise as much as 1.7 billion reais in an IPO in April. Brasil Travel Turismo & Participacoes SA and its shareholders plan to raise as much as 1.42 billion reais in an IPO, according to a prospectus published in Valor Economico newspaper on Jan. 24.
Brazil’s Bovespa stock index has risen 16 percent since the start of the year.