SAO PAULO, June 24 (Reuters) - Grupo BTG Pactual SA and Bank of America Merrill Lynch are vying for the last slot in a group of investment banks handling the initial public offering of IRB Brasil RE SA, Brazil’s top reinsurer, three sources with direct knowledge of the deal said on Wednesday.
The board of Rio de Janeiro-based IRB Brasil could decide on the fifth underwriter for the IPO as early as Friday, said the first source, who requested anonymity because the process is private. The company and shareholders expect the offering to raise up to 3 billion reais ($971 million) and be priced around October, the same source added.
A shortlist of underwriters include Banco do Brasil SA , Itaú Unibanco Holding SA and Banco Bradesco SA, with JPMorgan Chase & Co as global coordinator, the sources said. BTG Pactual was Brazil’s top equity underwriter last year, while BofA Merrill Lynch has consistently ranked among Brazil’s top-five equity advisors in recent years, Thomson Reuters and Anbima data showed.
The federal government has a 27 percent stake in the company, with state-run Banco do Brasil and Bradesco each holding about 20 percent and Itaú about 15 percent. The three banks want to exit from part or all of their stakes in the IPO, the second source added.
Brazil’s burgeoning insurance industry is growing in spite of the economy’s broader problems, and investors might be receptive to another insurance IPO. Currently, an IPO for the insurance arm of state-controlled Caixa Econômica Federal is in the works, with Banco do Brasil and UBS AG acting as lead underwriters, other sources told Reuters recently.
A potential capital injection into IRB, which was founded in the late 1930s, is being considered, the second and third sources said. IRB Brasil, Itaú, Banco do Brasil, Bradesco, BTG Pactual, BofA Merrill and JPMorgan all declined to comment.
IRB Brasil, formerly a state monopoly, wants to grow more aggressively in Latin America and Africa in an expansion that might require IRB Brasil to seek an initial public offering or tap an outside partner within the next couple of years, Chief Executive Officer Leonardo Paixão told Reuters in March.
$1 = 3.0899 Brazilian reais Editing by Andre Grenon