UPDATE 1-Brazil's Caixa, IRB to decide on IPOs next week, sources say

jueves 24 de septiembre de 2015 18:27 GYT
 

(New throughout, adds details, background)

By Guillermo Parra-Bernal and Aluísio Alves

SAO PAULO, Sept 24 (Reuters) - State-controlled insurers Caixa Seguridade Participações SA and IRB Brasil RE SA will decide early next week whether to list their shares this month as planned, or hold off due to the biggest rout in Brazilian financial markets in 13 years, five sources said on Thursday.

The three banks handling the initial public offering of Caixa Seguridade, controlled by lender Caixa Econômica Federal , will meet on Tuesday to decide whether to go on or suspend the deal, said the first two sources, who sought anonymity as the plans are private. The banks are Banco do Brasil SA, UBS AG and Goldman Sachs Group Inc, the sources added.

In the case of IRB Brasil, a former reinsurance monopoly now controlled by Brazil's largest local banks and the government, a meeting to decide on the IPO may also take place next week, a third and a fourth sources added. The deal is being managed by Banco do Brasil, Banco Bradesco SA Itaú Unibanco Holding SA and JPMorgan Chase & Co.

Both companies will gauge how much discount investors want to buy into the IPOs, the sources said, adding that pricing perception will be key to deciding whether to pursue the IPOs. Both Caixa Seguridade and IRB Brasil declined to comment.

Documentation for the Caixa Seguridade IPO is ready to be filed before securities industry watchdog CVM, said the first source, although the current slump in Brazil's currency, stocks and debt markets may lead the federal government's Caixa Seguridade's main shareholder, to put off the deal. The second source said that there are "increasing odds" the deal will be suspended.

The probability of both IPOs taking off is falling by the day, as a 10 percent tumble in the benchmark Bovespa stock index and 34 percent slump in the Brazilian real is making it harder for investors to consider buying new issues in Latin America's largest economy. Brazil's São Paulo Stock Exchange this week was replaced by Mexico's as the region's biggest equity market for the first time since February 2003.

Without a stable economic backdrop, institutional investors may remain reluctant to buy into IPOs without much of a track record, as is the case of Caixa Seguridade, which was formed this year, the first two sources added.

Stung by dozens of deals that failed to deliver the promised returns in recent years, money managers have become increasingly cautious about Brazilian offerings. In 2014, only one company went public on the country, the worst performance for domestic IPOs in 11 years.

($1 = 3.9363 Brazilian reais) (Editing by Leslie Adler and David Gregorio)