Number crunching: Brazilian IPOs

In 2007-08, the Brazilian stock exchange (Bovespa) was one of the highest performing of its kind in the world, with 64 companies choosing to list there in 2007 alone, according to data from Thomson Reuters.

It has slumped, however, since the highs of 2007, with things only starting to pick up in 2010 and 2011, when, according to the data, there were 11 IPOs in Brazil in both years.

However, quantity does not replace quality, as was shown by the most recent examples of IPOs by Brazilian investment bank Banco BTG Pactual, car rental company Companhia de Locacao das Americas (Locamerica) and furniture maker Unicasa Industria de Moveis.

After IPOs being in the doldrums, as the first of 2012, Locamerica was expected to be a good one, touted to pick up as much as $303mn (£187.9m). However, it managed to raise only $165.7m. White & Case and Machado Meyer Sendacz & Opice advised Locamerica, while Simpson Thacher & Bartlett and Mattos Filho Veiga Filho Marrey Jr advised the banks on the IPO.

However, just a matter of days later, Brazil’s second IPO of 2012 revealed a remarkably different picture: Conyers Dill & Pearman, Machado Meyer Sendacz & Opice and Skadden Arps Slate Meagher & Flom were retained to advise both the issuers and the banks when Banco BTG Pactual floated on Bovespa for $1.96bn. In spite of the strong price, as recent experience has shown in the Brazilian market, this provides no guarantee for good returns.

Yet, as further proof of the unpredictability of the current Brazilian market, on the same day Unicasa Industria de Moveis disappointed its shareholders by listing at only $197.1m. Clifford Chance and Souza Cescon Avedissian Barrieu e Flesch advised Unicasa, with Tauil & Chequer (which has a cooperation agreement with Mayer Brown) and White & Case advising the banks.

Although the recent listings show that 2012 may be another unpredictable year for Brazilian IPOs, with many companies forced to delay their plans to go public

or, like Locamerica and Unicasa, resign themselves to heavy discounts, the data shows that several law firms are benefiting from the number of companies

still looking to list, regardless of the asking price.

Davis Polk & Wardwell, Shearman & Sterling, Simpson Thacher and White & Case are four of the foreign firms that come out best in the data. Between 2007 and 30 April 2012, acting for either the issuer or the banks, Davis Polk and Simpson Thacher handled 26 IPOs apiece, while Shearman acted on 35 public offerings and White & Case clocked up 34 IPOs in total.

Davis Polk and Pinheiro Neto led on Brazil’s largest IPO in this period, when Banco Santander’s Brazilian Unit raised $7.5bn (£4.65bn) in a public offering in October 2009. Shearman and Machado Meyer Sendacz & Opice acted for the arrangers on the deal.

The next largest IPO was also in 2009, when Shearman and Mattos Filho led on Companhia Brasileira de Meios de Pagamento’s $4.3bn IPO, with Cleary Gottlieb Steen & Hamilton and Machado Meyer Sendacz & Opice acting for the banks.


Bovespa’s net profit fell by 18 per cent in 2011, according to Thomson Reuters.

Although it had risen again to around 16 per cent by mid-March 2012, there is an ongoing trend of disappointing earnings from companies in Latin America’s largest economy.

The rapid decrease in IPOs on Bovespa in 2010 and 2011 has been further exacerbated by the eurozone crisis, as investors continue to show reluctance to commit to riskier assets such as Latin American equities.

A key example was Brazilian mining giant Vale, which lost 1.78 per cent and caused the index to drop 1.18 per cent at the end of April 2012.


Top five IPOs in 2011

  1. White & Case and Mattos Filho advised QGEP Participacoes on its $902.9m IPO, with Milbank advising the banks
  2. Latham & Watkins and Mattos Filho acted for Qualicorp on its $680.9m IPO, with Davis Polk and Lefosse Advogados advising the banks
  3. Clifford Chance acted for Magazine Luiza on its $587.5m IPO. Linklaters advised the banks
  4. Simpson Thacher and Mattos Filho advised T4F Entre­tenimento on its $340.818m IPO, with Lefosse Advogados, Linklaters and White & Case acting for the banks
  5. White & Case and Souza Cescon advised Arezzo Industria e Comercio on its $339.4m IPO. Mattos Filho and Skadden advised the banks