Author: Antonio Guerrero

ROUNDUP: BRAZIL

By Antonio Guerrero

Healthy demand for Brazilian equities is driving a rush to list on Brazil’s BM&F; Bovespa Stock Exchange.

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BM&F; Bovespa: Business is booming

With corporations showing an appetite for raising cash to finance expansion plans, the exchange expects at least 13 new IPOs through April. Last year saw a slowdown in IPOs after Petrobras’ $70 billion offering—the world’s largest—virtually cornered the market. The exchange in January signed an agreement with state-run Banco do Brasil that facilitates new corporate listings. Since then the 2011 IPO pipeline has been filling quickly. Oil and gas company QGEP sold $902 million worth of shares in February, marking this year’s largest IPO so far. Proceeds will be used to finance offshore oil explorations.

Brazilian companies continue to explore expansion opportunities abroad. Brazilian billionaire Eike Batista agreed to acquire an 80% stake in Canadian gold explorer Ventana Gold for $1.56 billion. The deal will be completed through Batista’s AUX Canada Acquisition Inc, which already owns the remaining shares in Ventana, now giving it 100% control of the firm. The deal gives Batista access to silver and copper deposits in Colombia, in addition to some 3.5 million ounces of gold. Other deals, however, have been less successful, as in the Petrobras state-controlled oil company’s failure to reach an agreement over a 33% stake in Galp, Portugal’s largest oil company, for $5.6 billion.

A political scandal involving allegations of bidding irregularities could delay an extension of the São Paulo subway system. Authorities hoped construction of a new line would be completed for the 2014 FIFA World Cup, as São Paulo is one of the host cities for the soccer matches. Last October the country’s largest newspaper claimed to have obtained results of the bidding to choose a construction consortium six months before the outcome was announced. Brazilian construction companies Odebrecht and OAS, which won the bid, say there was no impropriety in the process. The state government has postponed the tender and canceled the $2.3 billion contract while it conducts an investigation. Six additional contracts were to be awarded as part of the expansion plan. The São Paulo subway, Brazil’s largest mass transit network, transports 2.1 million riders each day.