Global banks left on the sidelines in Brazil’s IPO boom

Global banks left on the sidelines in Brazil’s IPO boom
The Sao Paulo’s Stocks Exchange (Bovespa) headquarters is seen in Sao Paulo, Brazil. (AFP/File)
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Updated 15 September 2020

Global banks left on the sidelines in Brazil’s IPO boom

Global banks left on the sidelines in Brazil’s IPO boom
  • Key factors behind the shift include the increasing importance of reaching domestic investors

SAO PAULO: The days of marquee global investment banks being shoo-ins for stock market listings could be coming to an end, in Brazil at least.

The Brazilian market for initial public offerings is booming this year despite the pandemic. Yet among the five banks leading managers’ rankings in terms of deal volumes, four are domestic, according to Refinitiv data: Itau Unibanco Holding SA , Banco Bradesco SA, XP Inc. and Banco BTG Pactual SA.

The other is Bank of America.

That’s a marked reversal from the same period last year, when four of the top five were major global players — Bank of America, Credit Suisse, Citi and HSBC — with just one Brazilian outfit, Banco do Brasil.

Still, industry experts caution that, despite the shifting trends in 2020, it is too early to call a structural change in a market for IPOs that has been dominated by global banks for years.

Key factors behind the shift, according to industry experts, include the increasing importance of reaching domestic investors, and local banks’ existing relationships and loans to many of a new breed of midsize companies eager to go public.

Brazilian investors have flooded into stocks in recent months as interest rates have slumped to all-time lows, making fixed-income investments less attractive. Foreign investors have accounted for 38 percent of the money in Brazilian IPOs this year, compared with 57 percent two years ago and below the historic average level of 60 percent since 2007. “Local investors are moving to equities and fund managers are having a hard time finding company shares to buy,” said Pedro Mesquita, a partner at XP bank. When cash rebates provider Méliuz began planning an IPO last month, for example, it could have opted for global players, also including the likes of JPMorgan Chase, Morgan Stanley and Goldman Sachs, which all have local offices.

Yet Méliuz’s founders and venture-capital investors instead tapped BTG Pactual, Bradesco, XP and Itau Unibanco as its bookrunners.

Global banks are, however, still likely to be seen as the safe go-tos for the biggest deals, and they will likely snag some big mandates by the end of the year, industry experts say.

Multibillion-dollar IPOs, such as those by insurance company Caixa Seguridade SA, hospital chain Rede D’Or and retailer Havan SA will be managed by international as well as local banks, for instance.

“Local banks often have existing commercial relationships with smaller companies as they grow into the scale required for an IPO, but this does not mean that global banks will not lead in terms of volumes by year-end,” said Fabio Medeiros, managing director at Morgan Stanley in Sao Paulo.

IPOs in Brazil are on track for their biggest year since 2007. Thirteen companies have already made their debut and more than 40 others have filed for offerings with the regulator.

So far, companies have raised $3.1 billion, up 113 percent from the same period a year ago, in the 13 IPOs — outperforming global IPOs, which are up 20 percent, according to Refinitiv data.

In India, by comparison, there have been 21 IPOs, but they raised $1.7 billion, down 22.8 percent from a year earlier, while in China 328 deals raised $52.4 billion, more than double versus a year ago.

The four domestic banks leading Brazil’s ratings accounted for 54.3 percent of the country’s $3.1 billion deal volumes.

Many companies propelling the new IPO wave hail from beyond the traditional Sao Paulo-Rio business corridor, where global banks often lack offices and relationships.

“For a long time, the Brazilian stock exchange was all about commodities and banks,” said Alessandro Farkuh, head of investment banking at Bradesco. “Now there are companies from different industries, from pure e-commerce to more regional retail businesses. Domestic banks know all these companies.”


Erdogan replaces Turkish trade minister, forms two new ministries

Erdogan replaces Turkish trade minister, forms two new ministries
Updated 23 min 25 sec ago

Erdogan replaces Turkish trade minister, forms two new ministries

Erdogan replaces Turkish trade minister, forms two new ministries
  • In a presidential decree Ruhsar Pekcan was replaced as trade minister by Mus, who has been a lawmaker for Erdogan’s AK Party since 2011

ISTANBUL: President Tayyip Erdogan appointed a prominent member of Turkey’s ruling AK Party, Mehmet Mus, as trade minister on Wednesday and split the Family, Labour and Social Policies Ministry into two ministries.
In a presidential decree Ruhsar Pekcan was replaced as trade minister by Mus, who has been a lawmaker for Erdogan’s AK Party since 2011 and served as the party’s deputy chairman in charge of the economy.
The decree, published in the Official Gazette, gave no reason for the change, but it comes after opposition politicians accused Pekcan’s ministry of buying supplies from her family-owned company and called on her to resign.
The Trade Ministry confirmed that the purchase of sanitisers had been made, but said in a statement on Tuesday the choice was based on price alone and not due to “the name of the company making the sale.”
It said that the sale, worth some 500,000 lira ($62,000), had been carried out in line with relevant regulations.
Erdogan’s overnight changes come amid speculation over a wider cabinet reshuffle, after he changed the country’s top economic management in November, including the central bank governor.
The president established two new ministries by splitting the Family, Labour and Social Policies Ministry into two separate ministries, according to the decree.
He appointed Derya Yanik as Family and Social Policies Minister and Vedat Bilgin as the Labour and Social Security Minister, replacing Zehra Zumrut Selcuk.


Saudi Arabia to raise $800m from privatization of two flour mills.

Saudi Arabia to raise $800m from privatization of two flour mills.
Updated 21 April 2021

Saudi Arabia to raise $800m from privatization of two flour mills.

Saudi Arabia to raise $800m from privatization of two flour mills.
  • The National Center for Privatization & PPP (NCP) said it completed the sale of the two mills (MC2 and MC4) to private sector investors

DUBAI: Saudi Arabia is set to generate about SR3 billion ($800 million) in proceeds from the privatization of two flour mills.
The National Center for Privatization & PPP (NCP) said it completed the sale of the two mills (MC2 and MC4) to private sector investors.
A consortium that includes Abdulaziz Alajlan & Sons Company for Commercial and Real Estate Investment, Al Rajhi International for Investment, National Agricultural Development and OLAM International acquires the second milling company (MC2) for about SR2.14 billion, according to a stock exchange filing on Wednesday.
Meanwhile a consortium that includes Abdullah Al-Othaim Markets Company, Allana International Company and United Feed Manufacturing Company secured the fourth milling company for SR859 million.
Saudi Arabia is accelerating plans to privatize key infrastructure in an effort to modernize the economy, speed major infrastructure works and develop its financial services sector.


AirTag or purple iPhone? Where and when can I buy Apple’s latest launches?

AirTag or purple iPhone? Where and when can I buy Apple’s latest launches?
Updated 21 April 2021

AirTag or purple iPhone? Where and when can I buy Apple’s latest launches?

AirTag or purple iPhone? Where and when can I buy Apple’s latest launches?
  • Good news for Apple fans in the Gulf – all the new products will be available in the region as early as the end of April

DUBAI: Apple just held its first keynote event of the year – announcing new products such as a button-like accessory to help people keep track of their belongings, as well as updates for existing models including a purple iPhone 12.
Good news for Apple fans in the Gulf – all the new products will be available in the region as early as the end of April.
Here are the new products launched during the Apple event in its Cupertino headquarters, and their prices and availability status in the UAE:

AirTag
Price: Starting 129 dirhams
Availability: Pre-order starts on April 23; product is available on April 30


24-inch iMac (available in seven different colors)
Price: Starting 5,499 dirhams
Availability: Pre-order starts on April 30; product is available in the second half of May

Apple TV 4K
Price: Starting 729 dirhams
Availability: Pre-order starts on April 30; product is available in the second half of May

iPad Pro with M1 chip
Price: Starting 3,199 dirhams
Availability: Pre-order starts on April 30; product is available in the second half of May

Other announcements:
The new purple iPhone 12 has no other updates other than the color – it will be the same price as the other iPhone 12 models.
The new iOS 14.5 will be launched next week. It comes with the biggest privacy changes Apple will introduce so far, according to a statement.


More jobs advertised for Saudis by Royal Commission for Jubail and Yanbu

More jobs advertised for Saudis by Royal Commission for Jubail and Yanbu
Updated 21 April 2021

More jobs advertised for Saudis by Royal Commission for Jubail and Yanbu

More jobs advertised for Saudis by Royal Commission for Jubail and Yanbu
  • The Kingdom has stepped up efforts to secure more jobs for its citizens in line with similar localization efforts underway elsewhere in the region

RIYADH: The Royal Commission for Jubail and Yanbu (RCJY) has advertised 96 jobs for Saudis on its website, in Riyadh, Jazan, Jubail and Yanbu.
They cover administrative, engineering and health roles.
Among the advertised positions are a financial planning specialist, director of transportation and equipment department, director of buildings department, and director of public facilities department.
The Kingdom has stepped up efforts to secure more jobs for its citizens in line with similar localization efforts underway elsewhere in the region.
The Royal Commission for Jubail and Yanbu (RCJY) was established by royal order in 1975 to kickstart the Kingdom’s petrochemicals industry.


WH Smith to open at King Abdulaziz International Airport in Jeddah

WH Smith to open at King Abdulaziz International Airport in Jeddah
Updated 21 April 2021

WH Smith to open at King Abdulaziz International Airport in Jeddah

WH Smith to open at King Abdulaziz International Airport in Jeddah
  • Airport retail may rebound on travel resumption
  • Pandemic culls names across retail sector

DUBAI: British retailer WH Smith is coming to King Abdulaziz International Airport in Jeddah.
Tihama Advertising, Public Relations and Marketing Company has agreed a deal with the General Authority of Civil Aviation to lease two units at the airport, it said in a Saudi stock exchange filing.
Tihama Education, a unit of the Tadawul-listed company, will operate two outlets under the WH Smith brand franchise, covering arrivals and departures.
Tihama has an existing partnership with WH Smith at Riyadh Airport and in the UAE.
WH smith did not respond to a request for comment.
Founded in 1792, WH Smith is one of the oldest names on the British high street and has also become one of the world’s leading travel retailers operating over 1,100 stores in 31 countries.
Retailers have suffered from the impact of more than a year of intermittent lockdowns worldwide but the transport-focused end of the retail business may stand to benefit from a resumption of international air travel.
Analysts at RBC upgraded WH Smith to ‘outperform’ from ‘sector perform’ last week and lifted their price target on the stock to 2,200p from 2,100p.