Jumbo equity deals rise as Brazil’s $27bn rush slows

This year, fewer but larger equity offers are expected in Latin America’s largest economy, as rising local interest rates and presidential election concerns increase the appeal of huge, liquid transactions.

According to data collated by Bloomberg, Brazilian share sales raised a total of 155 billion reais ($27 billion) in 85 transactions in 2021, only 2.5 per cent less than the record 159 billion reais raised in 2020. Gustavo Miranda, head of investment banking at Banco Santander SA’s Brazilian branch, said that the volume of deals would decline, but overall revenues could still be significant.

“The market will be quite selective, favouring larger deals and well-known companies,” Miranda told Bloomberg News. “Liquidity is key for investors to get in and out of positions when needed, especially in a more volatile year.”

As noted in fresh Bloomberg data, less than a quarter of the 46 Brazilian listings on the local stock exchange raised more than 1.5 billion reais ($264 million) last year.

The rate for secondary offerings was slightly greater, at around 50%. Brazilian issuers will confront hurdles such as the central bank’s rate hike cycle, which is increasing the appeal of fixed-income products while decreasing the desire for stocks among Brazilians.