SAO PAULO Oct 18 Brazil's securities industry watchdog CVM suspended on Friday the initial public offering of Grupo Ser Educacional SA, saying the education company failed to include relevant tax information on the offering's prospectus.
In a statement, the Rio de Janeiro-based regulator said the suspension of Ser Educacional's IPO could last for up to 30 days. CVM said the prospectus lacks precise information on tax benefits stemming from a government program offering exemptions to universities involved in a tuition fee subsidy program.
"The suspension could be revoked, within the period above mentioned, if the irregularities found are properly fixed," the statement said. "The decision was taken because the prospectus ... did not contain the necessary information that an investor requires to take a thoughtful investment decision."
The impasse comes amid a three-month drought in stock listing debuts in the São Paulo Stock Exchange. Ser Educacional and shareholders expected to price the IPO, through which they sought to raise up to 723.3 million reais ($333 million), later on the day.
In September, the tax agency, known in Brazil as Receita Federal, issued new rules governing tax benefits for education companies involved in the ProUni program. Under terms of the decision, listed and potential stock market debutantes in the sector need to inform investors of the impact of such benefits on their balance sheet.
GAEC Educação SA and a shareholder have plans to raise as much as 626.3 million reais in an IPO next Thursday. The company, which is known in Brazil as Anima Educação and owns three universities located in the cities of Belo Horizonte and Santos in southeastern Brazil, wants to use proceeds from the IPO to expand and strengthen its capital position.
Brazil's $11 billion-a-year education industry has grown at double-digit rates in recent years as a tight job market demands a skilled labor force with better technical knowledge, stronger analytical abilities and proficiency in foreign languages.
Initial public offerings have become a feasible fundraising option for college operators, language schools and learning systems providers, just as mergers and acquisitions activity has heated up over the past two years.
Ser Educacional sought on Friday to sell as many as 15.39 million shares in a primary offering. Additionally, shareholders wanted to offer up to 15.39 million shares in a secondary offering. The company suggested a price tag between 19.50 reais and 23.50 reais for the shares.
The company hired the investment banking units of Grupo BTG Pactual SA, Credit Suisse Group, Goldman Sachs Group Inc and Banco Santander Brasil SA to manage the transaction.