Biosev SA, Louis Dreyfus Holding BV’s Brazil unit, tumbled in its debut after giving investors in its initial public offering a money-back guarantee.
The shares dropped 14 percent to 12.85 reais at the close of trading in Sao Paulo after earlier sinking as much as 16 percent, according to data compiled by Bloomberg. The benchmark Bovespa index gained 1.4 percent.
Brazil’s second-largest sugar-cane processor raised 805 million reais ($400 million) by selling shares for 15 reais apiece and put options for 25 centavos that allow investors to return the stock for 16.57 reais over the next 15 months, according to an April 15 prospectus. Louis Dreyfus, based in Amsterdam, controls Biosev through three companies and bought 100 million reais of stock in the offering.
The controlling shareholders’ purchase sent “a bad signal to the market,” Luiz Roberto Monteiro, a broker at Renascenca DTVM, said in a telephone interview from Sao Paulo. “The feeling is that the IPO was overpriced.”
Biosev was planning to raise as much as 945 million reais in the stock offering, according to an April 10 preliminary prospectus.
Two other companies have held IPOs in Brazil this year after the country in 2012 had the fewest offerings since 2003, data compiled by Bloomberg show. Senior Solution SA, which priced shares below the expected range, has gained 0.6 percent since its debut. Software maker Linx SA, which priced shares at the top of its expected range, is up 18 percent since it started trading.
Cosan SA Industria & Comercio is Brazil’s largest sugar-cane processor.