August 24, 2007

 

Foreign investors buy 70 percent shares of Brazil's Minerva SA

 

 

Seventy percent of the shares sold by Brazil's fourth largest beef exporter, Minerva SA have been bought by investors from overseas via an initial public offering (IPO) on the Brazilian Stock Exchange, or Bovespa, the company said Thursday (August 23) in a statement.

The company raised 444 million Brazilian reals (US$220 million) from the sale.

 

Minerva sold a total of 24 million common shares, with foreign investors buying 16.9 million shares. The shares were priced at BRL18.50.

 

On Wednesday, the company's shares ended at BRL16.99 with Credit Suisse Group as the lead manager.

 

The company said it intends to use the proceeds to expand its production capacity and also in possible acquisitions.

 

Minerva's shares were listed under the Novo Mercado mechanism, which has the busiest listing rules on the Bovespa. To qualify, a company must sell a minimum stake of 25 percent and 100 percent of the company's shares must be common rather than preferred.

 

With the IPO, Minerva was the third Brazilian beef processor to list its shares on the local stock exchange.

 

In March, Brazil's JBS SA (JBSS3.BR), which controls leading beef exporter Friboi, raised BRL1.6 billion from its IPO. At the end of June, Marfrig (MRFG3.BR) debuted on the Bovespa, raising BRL 887.4 million.

 

Brazil is the world's leading beef exporter, accounting for roughly 30 percent of the international beef market.

 

Minerva's IPO comes amid an expansion of local beef processors.

 

JBS announced the purchase of Swift Foods Co., the third-largest US processor of beef and pork on May 29, for $1.4 billion. The acquisition made JBS the largest beef company in the world.

 

Given the important stake held by Brazilian beef producers in the global market, the companies frequently access the debt market to raise money. Now, some of those financial needs have migrated to the equity market, according to financial market analysts.