Funding in Brazil: where do we stand?

Earlier this year, I wrote briefly about the prospects for IPOs, a form of funding for companies, in Brazil in 2019, at an event hosted by MZ. Nine months later, Centauro (CNTO3), Neoenergia (NEOE3) and Vivara (VIVA3) have held their IPOs, raising a hefty amount of over R$6.5 billion.  C&A (CEAB3) and BMG (BMGB11) will go public in the last week of October.

This year, we have already had more IPOs on B3 than in the whole of last year. It is also worth noting that Anbima data show funding rose 42% year on year and that the 2019 figure is already the highest in the complete historical series.

However, IPOs are not the only possibility for companies seeking to raise capital in B3. The famous follow-on (process through which a company that is already listed and has already issued shares returns to the market to offer more securities) was the fastest-growing form of funding in the domestic capital market, up from R$111 million in 2018 to a substantial R$53.1 billion by September of this year.

The volume of real estate investment funds issued by September 2019 also increased more than 100% compared to the same period last year. Individuals accounted for the lion’s share of the public offerings, with 49.4%.

Even so, most of the funding (45.5% of the total) is coming from debentures, with institutional investors leading demand for this type of funding. Funding proceeds were mostly allocated to the refinancing of liabilities and working capital financing.

Talking about institutional investors and fund managers, if we look only at the shareholder bases of the main peers of C&A (Renner, Guararapes and Marisa) and BMG (Itaú, Bradesco, Santander, Banco do Brasil, BTG and Banco Pan), according to information provided by MZiQ, we have more than 1,425 institutions worldwide, with over US$ 54.8 billion invested in these peers, including 137 institutions from New York city, 129 from São Paulo and 71 from Rio de Janeiro. This means there is a wide variety of funding options for Brazilian companies – they just have to know about each one of them and choose the one that best suits their profile and need.

I hope you liked, if not, sorry about that! – Canadian style ㋡

Published by Marco Antônio Tomás