BB Seguridade Participacoes SA, Banco do Brasil SA’s insurance unit, declined in its first day of trading after pricing shares in an initial public offering close to the high end of its targeted range.
The shares sank 2.4 percent to 16.60 reais at the close of trading in Sao Paulo from the IPO price of 17 reais, after earlier falling as much as 5.3 percent. The Ibovespa stock benchmark rose 1.2 percent. Banco do Brasil dropped 0.9 percent to 24.97 reais.
BB Seguridade is raising 8.5 billion reais ($4.2 billion) in the world’s biggest initial public offering this year. The company had said in a prospectus that it expected to price the shares between 15 reais and 18 reais. The sale came during the busiest month for Brazilian IPOs in five years even as the country’s main equity gauge is posting the worst decline in major emerging markets in 2013.
“BB Seguridade has a diversified business model that includes brokerage activities, but 17 reais is very close to its fair value, so there’s not much room for additional gains,” Rodrigo Martin, an analyst at Quantitas Asset Management, said by phone from Porto Alegre. “Some investors are trying to profit in the first day of trading from the IPO, but this strategy hasn’t been very effective lately on the Bovespa.”
Four Brazilian companies have done IPOs in April, the most in a month since six went public in October 2007, data compiled by Bloomberg show. Together they raised 11 billion reais, excluding the so-called greenshoe option for underwriters to buy additional shares. Three of the four have declined since their offerings. The Ibovespa has tumbled 10 percent this year.
Brazilian airline Gol Linhas Aereas Inteligentes SA’s mileage unit, Smiles SA, also made its trading debut in Sao Paulo today after its IPO. Its shares rose 6 percent to 23 reais.