Tupy SA, the largest foundry in Latin America, is seeking investment banks to lead an equity offering of 1 billion reais ($487 million), three people with direct knowledge of the matter said.
Tupy, whose initial public offering was in 2002, envisions the sale for sometime next year as a so-called re-IPO that boosts trading volume by increasing the number of shares outstanding, according to the people, who asked not to be identified because the discussions are private.
Investors in Tupy, the world’s largest maker of cast-iron cylinder blocks, traded as few as 100 shares with a total value of 3,160 reais on Feb. 9 this year, and the average daily value for 2012 is 483,000 reais ($235,000), according to data compiled by Bloomberg. That compares with an average daily trading value of $9.5 million for Kurimoto Ltd., the Tokyo-based foundry that’s less than half the size of Tupy based on market capitalization.
Tupy, based in Joinville, Santa Catarina, has a market value of 2.72 billion reais with a so-called free float of 4 million shares out of the total 56.8 million outstanding, the data show. The shares, which gained 72 percent this year, rose 2.5 percent to 47.85 reais at 5:05 p.m. in Sao Paulo trading yesterday.
Because liquidity for the existing shares is so low, the current share price isn’t considered a benchmark for where the new offering would be priced, the people said.
Previ, the pension fund for employees of government-owned Banco do Brasil SA, and BNDES Participacoes SA, a unit of the Brazilian development bank, are the controlling shareholders of Tupy, according to data compiled by Bloomberg. They each have stakes of almost 36 percent.
Tupy has two manufacturing plants. One is in Joinville with a production capacity of 445,000 metric tons per year and the other is in Maua, in the greater Sao Paulo area, with capacity for manufacturing 95,000 metric tons annually, according to the company’s website. It has 9,000 employees.
Tupy this year completed the acquisition of two metal processing plants in the Mexican cities of Saltillo and Ramos Arizpe from Grupo Industrial Saltillo for about $439 million, the company said in a regulatory filing.
Tupy declined to comment on a proposed stock sale in an e-mailed statement.