Business

IPOs are on the rise in Brazil thanks to historically low interest rates

The forecast of specialists is that the IPOs of 2021 will easily exceed BRL 45.3 billion raised in 27 such operations last year, the record since 2007

Photo: REUTERS/Amanda Perobelli
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  • So far in 2021, there have already been 13 debut on the Bovespa in IPOs that handled BRL 19.2 billion;
  • Currently, there are others 37 operations under analysis at CVM.

Five more companies requested authorization from the Brazilian Securities and Exchange Commission (CVM) to sell shares for the first time. They are companies from different areas: the online retailer Privalia, the corn ethanol producer FS, the car finance company Rodobens, the LED manufacturer Unicoba and the hospital group Mater Dei.

Demand shows how initial public offering (IPOs) are on the rise in Brazil: so far in 2021, there have already been 13 debut on the Bovespa in IPOs that handled BRL 19.2 billion.

Currently, there are 37 operations under analysis at CVM and dozens of other companies intending to follow the same path, stimulated by interest rates of at least 2% per year, the forecast of specialists is that the IPOs of 2021 will easily exceed BRL 45.3 billion raised in 27 such operations last year, the record since 2007.

READ ALSO: Bemobi IPO turn over BRL 1.26 billion; each share was BRL 22.00

Despite the increase, there are dropouts or sales below the expected value

The number of IPOs is not greater because several companies gave up their debut on the stock market when they realized that investors would not pay as much as they wanted for their shares. Just in 2021, 10 companies dropped out.

This shows the complexity of the current environment for many Brazilian companies. Even with historically low interest rates in Brazil and in the world, investors have shown that they are not willing to buy any shares.

READ ALSO: After its IPO, Brazil’s Locaweb acquires Curitiba-based Connectplug for BRL 18 million

Even among those that reached the market, some had to accept to sell their shares at the minimum price they expected, such as Eletromidia, Oceanpact and CSN Mineração, just to mention this week’s debuts.

Translated by LABS.

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