Copersucar Halts $1.7 Billion IPO in Brazil on ‘Unfavorable’ Conditions

Copersucar SA, the millers’ cooperative that accounts for 10 percent of global sugar exports, suspended its plan to sell shares in an initial public offering in Brazil because of an “unfavorable market.”

The IPO will be postponed for 60 business days, Copersucar said in a statement published in Valor Economico newspaper today. The Sao Paulo-based cooperative and its 26 shareholders were planning to raise as much as 2.7 billion reais ($1.7 billion) in what could’ve been Brazil’s largest initial offering in two years.

Seven out of the 10 companies that held IPOs in Brazil this year sold shares at the bottom of their price ranges or below, including oil and gas producer QGEP Participacoes SA and Qualicorp SA, a health-insurance broker controlled by Washington-based Carlyle Group. At least five companies canceled IPO plans in Sao Paulo this year before Copersucar.

Brazil’s benchmark Bovespa stock index fell 15 percent this year through yesterday, the worst performer out of 18 major global indexes tracked by Bloomberg. Perenco Petroleo & Gas do Brasil Participacoes SA said on July 1 it suspended its planned IPO for up to 60 days because of market conditions, while Tereos Internacional SA canceled its stock sale on the same day.
Biggest Since 2009

The initial plan was to sell as many as 145.9 million shares, including possible supplementary offerings, for 14.50 reais to 18.50 reais each, according to a June 30 preliminary prospectus. The IPO would be the largest in Brazil since October 2009, when Banco Santander SA raised 13.2 billion reais in the listing of its local unit in Sao Paulo.

The company planned to use proceeds from the share sale to build an ethanol pipeline in Brazil and almost double its sugar export capacity at the Port of Santos, Brazil’s largest for the sweetener, to 10 million metric tons. The cooperative’s 48 mills have agreed to supply all the sugar and ethanol they produce in the next decade for Copersucar to trade.

Copersucar’s mills can process 115 million tons of sugar- cane and had reported net sales of 8.3 billion reais in the fiscal year that ended March 31.

Companies in Brazil raised 6.14 billion reais in initial public offerings this year, or 10 percent less than the same period last year, Bloomberg data show.

Banco Itau BBA SA was coordinating Copersucar’s share sale with Bank of America Merrill Lynch Banco Multiplo SA, Banco de Investimentos Credit Suisse (Brasil) SA and Goldman Sachs do Brasil Banco Multiplo SA.