DEALTALK-Blackrock, investment funds wary of revival in Brazil IPOs
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By Guillermo Parra-Bernal and Paula Arend Laier
SAO PAULO, Sept 16 (Reuters) - BlackRock Inc and other investment firms are not so sure that a revival of initial public offerings in Brazil will fly.
Speculation that President Dilma Rousseff could lose an October election to a more market-friendly challenger has boosted Brazilian stocks and reignited interest in an IPO market that has been dormant this year. The Bovespa stock index has rallied as much as 11 percent since Aug. 14.
Three companies, JBS Foods SA, T4U Holding Brasil SA and Ouro Fino Saúde Animal Participações SA, will take advantage of improving market sentiment and try to price their initial offerings next month.
The IPOs are set to happen between the first and second rounds of Brazil's most unpredictable presidential election in 12 years. Regardless of how polling on the race swings, bankers involved in the deals told Reuters there is no turning back.
Yet pension funds and asset management firms remain wary. Apart from election-related risks, concerns over reduced global liquidity and an economic recession extending into next year could discourage them from snapping up shares of companies with little track record or earnings visibility.
"I don't see why anyone would get into an IPO now in Brazil, the environment is not a good one," said William Landers, who oversees $4 billion in Latin American equities for BlackRock, the world's largest money manager. "Companies have to face the reality of higher risk premiums."
Fabio Moser, who manages 5.9 billion reais ($2.52 billion) for Fator Administração de Recursos, said companies seeking to debut in the local stock market face a delicate balancing act: how to offer attractive risk and return as economic and political uncertainty escalates. Continuación...