Brazil First Quarter IPO Requests May Increase to 10

Brazil companies may file as many as 10 requests for initial public offerings this quarter, according to Shearman & Sterling LLP, a New York-based law firm involved in about half the IPOs in Latin America’s biggest stock market.

More companies are asking regulators to let them sell shares as foreign investors “begin to sniff around” in the Brazilian IPO market, Andrew B. Janszky, head of Shearman in Sao Paulo, said in an interview.

Six companies held initial share offerings in the Brazilian market last year and four in 2008, down from 58 in 2007, as the global financial crisis that started with the U.S. subprime mortgage collapse damped investor appetite for risk, according to Bloomberg data.

“We will have a good year in 2010 but nothing compared to 2007,” Janszky said.

Foreign investors, who buy about 70 percent of shares sold in primary offerings in Brazil, are demanding companies sell a higher number of shares so that the stocks can be more actively traded, he said. Companies need to sell a minimum of 400 to 500 million reais in stock for an offering to be attractive to foreign investors, Janszky said.

Brazil’s Bovespa index climbed 83 percent last year, more than three times the gain of the Standard & Poor’s 500 Index and more than the MSCI Emerging Markets Index’s 75 percent rise, as the nation emerged from recession in the second quarter. Brazil’s economy sustained growth in the second half as tax cuts, record low interest rates and credit expansion helped domestic demand drive the economic rebound. The Bovespa has dropped 0.7 percent this year.