Warburg Pincus Said to Opt Out of Buying Brazilian Bank's Shares

  • New York-based fund will have its stake in Indusval diluted
  • Lender is raising $20 million in capital with share sale

Warburg Pincus LLC, the New York-based private-equity firm, won’t buy more shares of Banco Indusval SA as the Brazilian bank sells stock to raise 80 million reais ($20 million) in capital, according to two people with direct knowledge of the matter.

The firm, which invested in Indusval in 2011, will have its stake diluted from 30 percent to 20 percent under the plan, the people said, asking not to be named because the matter isn’t public yet. The $6 million share purchase Warburg Pincus would have to make to avoid dilution was rejected by the firm because it’s seeking larger investments, the people said.

Indusval investors approved the capital increase on Aug. 31 and controlling shareholders will guarantee the 80 million reais. The bank’s book value will be 620 million reais after the capital raise. Indusval’s market value was 186.1 million reais on Friday. Its shares have declined 56 percent this year.

“We remain supportive of Banco Indusval’s management team and its strategy to resume growth in Brazil,” Warburg Pincus said in a statement.

Indusval declined to comment.

Among the bank’s shareholders are co-Chief Executive Officer Jair Ribeiro and Chairman Manoel Felix Cintra Neto, who’s the former head of BM&FBovespa SA.

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