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BTG Pactual, Brazil’s fast-growing investment bank, has received total orders worth five times the number of shares available for its initial public offering to raise close to $2bn, people familiar with the listing said.
The bank is set to price its IPO units later on Tuesday at about R$31.25, near the middle of its R$28.75-R$33.75 target range, which would give it a valuation of just over $14.5bn. BTG Pactual will probably use at least part of an additional “greenshoe” option of shares, the people said.
The strong demand, which comes despite the recent revelation of an insider trading case against André Esteves, the bank’s controlling billionaire shareholder, is expected to provide a much-needed boost to the country’s moribund equity market.
BTG Pactual’s IPO will rank as the country’s biggest since the $7.5bn offering for Banco Santander’s Brazil unit in 2009 and the seventh-largest on record, according to data from Dealogic.
From a small brokerage in Rio de Janeiro to Latin America’s biggest standalone investment bank, the meteoric rise of BTG Pactual and its high return on equity have been easy to sell in an industry still reeling from the effects of the financial crisis.
The people familiar with the listing estimated that the offering had followed the pattern of recent IPOs in Brazil, with a majority of interest – put at 70 per cent – coming from foreign investors. The retail allocation for 10 per cent of the stock was also expected to be fully allocated.
“The big surprise though has been more than expected interest from Latin America and the Middle East,” said a person familiar with the issue.
BTG Pactual’s flotation on Thursday, in which the bank’s shares will be listed in São Paulo and global depositary receipts on the Euronext in Amsterdam, contrasts with other planned IPOs in Brazil that have been cancelled or priced below range.
Last week, car rental firm Locamerica became the first Brazilian company to complete an IPO this year, pricing its shares 18 per cent below target. Concerns over the eurozone and slowing growth in China have knocked about 10 per cent off Brazil’s Bovespa stock index since the middle of March.
There have also been concerns about BTG Pactual’s IPO itself. The day after the bank published the prospectus for its IPO, Mr Esteves was fined €350,000 for insider trading by Italy’s Consob market regulator.
Consob says Mr Esteves made a large profit when he bought shares in Cremonini in 2007, using inside information about an upcoming joint venture between the Italian food company and Brazilian beef processor JBS.
Mr Esteves has said he will appeal the charges, which he says are completely without merit.
BTG declined to comment on the offering.
Goldman Sachs Group, Banco Bradesco, Citigroup, JPMorgan Chase, Banco do Brasil, UBS, Deutsche Bank and Morgan Stanley are managing the offering.