Carlyle’s CVC Prices Shares Below Estimated Range in Brazil IPO

Carlyle Group LP’s travel agency was the fifth of 10 Brazilian initial public offerings to be priced at the bottom or below the target range this year as the Ibovespa sinks the most among the world’s major equity gauges.

The private-equity firm and other investors are selling shares in CVC Brasil Operadora e Agencia de Viagens SA for 16 reais each, below the estimated range of 18 reais to 22 reais indicated in the prospectus, according to a regulatory filing yesterday. Carlyle withdrew a sale in 2012, citing “unfavorable” market conditions.

Yesterday’s IPO was the 10th in Brazil in 2013. Previous offerings raised $8.2 billion, more than triple the total for all of 2012, even as volatility in the Ibovespa prompted companies including Votorantim Cimentos SA and Azul Linhas Aereas Brasileiras SA to scrap sales. Half of this year’s offerings priced shares below or at the bottom of the target range, according to data compiled by Bloomberg.

“It’s not easy to get a deal done in this environment,” Michael Shaoul, the chief executive officer of Marketfield Asset Management LLC, which oversees about $17 billion, said by phone from New York. “There’s no appetite for new risk.”

The Ibovespa declined 17 percent this year in the steepest drop among the world’s 20 biggest equity benchmarks as growth in Latin America’s largest economy faltered. The 0.5 percent decline in gross domestic product in the third quarter from the previous three months was the biggest contraction since 2009, according to data the national statistics agency released this week.

Sale Plan

CVC was seeking to sell as many as 45.6 million shares and raise as much as 1 billion reais ($424 million) in the IPO, according to the prospectus. The Santo Andre, Brazil-based company’s stock will start trading on Dec. 9 in Sao Paulo, according to the prospectus.

The company, which says it is the country’s biggest travel agency, had booked sales of about 4 billion reais in 2012, and of 3.3 billion reais this year through September, according to the IPO prospectus.

CVC said that tourism will pick up when Brazil hosts the 2014 World Cup soccer tournament and 2016 Olympic Games. Brazil estimates about 600,000 foreign tourists and “millions of Brazilians” will travel for the World Cup, while the Olympics should generate $3.3 billion for Rio de Janeiro’s tourism industry, the prospectus said.

Brazil had the world’s biggest initial public offering this year, as BB Seguridade Participacoes SA, the insurance unit of Banco do Brasil SA, raised 11.5 billion reais in April. Six of the nine stocks already trading have climbed from their offering prices, data compiled by Bloomberg show.

Education company Ser Educacional SA was the last Brazilian company to do an IPO, selling shares in October.

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