Brasil Travel Cancels IPO After Investors Balk at Terms

Brasil Travel Turismo e Participacoes SA canceled an initial public offering after investors demanded current shareholders hold on to a bigger stake in the company.

The cancellation was due to “unfavorable” market conditions, the company said today in a regulatory filing.

Brasil Travel said earlier in the day that its offering would be postponed a day as potential investors demanded that the company’s current owners adopt rules that would require them to retain shares equal to 50 percent of the amount they’re selling for at least six months, compared with 15 percent previously. The owners would have been allowed to sell as much as 40 percent of their stakes during the following six months.

The investors wanted current shareholders to show more commitment to the company, said a person with direct knowledge of the offering who asked not to be identified because he isn’t authorized to speak about the matter. Brasil Travel, a group of 35 travel agencies in Brazil, had planned to use funds raised in the offering to expand through acquisitions.

A prospectus filed last month put the IPO price range at 1,250 reais to 1,650 reais per share. Brasil Travel said it planned to offer as many as 859,100 common shares, with 568,700 sold by existing investors.

Credit Suisse Group AG was coordinating the sale with Barclays Capital, Banco Santander SA and Flow Corretora de Mercadorias.

IPO Market

Brasil Travel’s IPO would have been the first such offering in Latin America’s largest equity market since July. The company expected to benefit from an anticipated boom in Brazil’s tourism industry as the nation renovates roads and airports to host the 2014 Soccer World Cup and 2016 Summer Olympics. Rival CVC Brasil Operadora e Agencia de Viagens SA filed to sell shares with the securities regulator in August, without setting a time frame.

Brazilian companies are waiting to complete initial public offerings totaling as much as $28 billion as foreigners resume buying stocks from the country after demand plunged last year, Eduardo Refinetti Guardia, BM&FBovespa SA’s chief financial officer, said Feb 7.

About 40 companies are ready to go public with IPOs averaging $600 million to $700 million as market conditions improve, Guardia said in an interview in London. BM&FBovespa is the operator of Latin America’s biggest securities exchange.

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