Analysts see Brazil equity offerings gaining traction this year
By Guillermo Parra-Bernal and Paula Arend Laier
SAO PAULO Aug 30 (Reuters) - More Brazilian companies are expected to tap equity markets for funding in coming months, encouraged by less political turmoil and signs that the harshest recession in eight decades is subsiding, analysts said on Tuesday.
A healthy deal flow of equity capital markets transactions is growing on expectations the Brazilian economy is heading for recovery, analysts from the nation's top investment banks and brokerages said at a Thomson Reuters event in São Paulo.
Some of those deals, which include follow-on offers, private placements and eventually initial public offerings, could help refinance debt and fund future expansion. Appetite for new offers can be felt across the board and may be stimulated by cash-flush foreign investors chasing higher returns than they can get in developed countries, the analysts said.
"We feel that the deal flow has already formed, because a number of companies need to redefine their capital structure," said Pedro Batista, chief Latin America equity strategist for JPMorgan Securities.
This year has been among the weakest in more than a decade for equity capital markets activity in Brazil. Still, in recent weeks, three companies filed with security industry watchdog CVM for permission to sell stock. Two of the deals are IPOs.
Late on Monday, Brazilian medical laboratory Centro de Imagem Diagnósticos SA filed for an IPO, which will be advised by investment banking firms Itaú BBA SA, Bank of America Merrill Lynch and Santander Investment Securities.
Marcos Assumpção, a senior analyst at Itaú BBA, said conditions for a more solid recovery in offerings are gradually taking shape. He cited a shift toward more business-friendly economic policies and a "commitment to relying more on investment to fuel future growth."
Such a stance, coupled with growing investment inflows into emerging market countries like Brazil, could boost equity capital markets activity. Continuación...