CORRECTED-UPDATE 1-Brazil's Via Varejo offering prices below suggested range

Thu Dec 12, 2013 7:15pm EST

(Corrects to show retailer priced a share offer below the suggested range, not an initial public offering, in headline and lead)

By Guillermo Parra-Bernal and Marcela Ayres

SAO PAULO Dec 12 (Reuters) - Via Varejo SA, Brazil's largest home appliance retailer, priced a share offering below the suggested range on Thursday, a sign that investors remain skittish over the outlook for Latin America's largest equity market.

Units of São Paulo-based Via Varejo priced at 23 reais each, below the 25.60 reais to 33.60 reais pricing range, according to information on the website of securities industry watchdog CVM.

Two sources told Reuters earlier in the day that even as demand for the stock was solid, pricing might come at the low end of the range or even below it.

Controlling shareholder GPA SA and the Klein family raised a total of 2.845 billion reais ($1.22 billion), Brazil's second biggest stock sale this year after BB Seguridade Participações SA's 11.48 billion reais IPO in April. GPA and the Kleins did sell the combined 106.7 million units they had put on the block.

The Via Varejo offering took off even as local investors, who placed orders for 60 percent of the deal, sought a large price discount to protect themselves from a recent rout in domestic equities and the impact of further divestments by the Kleins expected next year, one of the sources said after the deal was priced.

According to the source, investors placed bids for the units 2.5 times the amount offered at a price of 23 reais each. At higher prices, though, demand was to come in substantially lower, the source added, without elaborating.

"You can't rate this deal only from the point of view of the price range; it was successful given the challenging conditions out there," said the source, who declined to be identified because some aspects of the deal are still being finalized.

Brazil's once-hyped market for IPOs and follow-on offerings has struggled over the past couple of years, given the risk of over-priced deals, flagging economic growth and the impact of heavy state interference in some sectors of the economy.

Last week, CVC Brasil Operadora e Agencia de Viagens SA priced shares in its IPO below expectations, partly on worries of how Brazil's slowing growth and cooling job market could dent demand for air tickets, hotels and travel.

For Via Varejo, investors sought to increase their exposure to the company's lead in the local appliance market, an ongoing turnaround in its operations and a potential recovery in household spending and credit disbursements. Via Varejo has 26 percent of Brazil's consumer electronics market, according to consultancy GfK.

The investment banking unit of Credit Suisse Group AG managed the deal, along with Bradesco BBI and Bank of America Merrill Lynch. Advisers also included Goldman Sachs Group Inc, Itaú BBA, JPMorgan Chase & Co, Banco Santander SA, and UBS AG.

Via Varejo was formed as an autonomous unit of GPA in 2010, months after the retail giant acquired Casas Bahia SA and Globex Utilidades SA, at the time Brazil's biggest home appliance chains.

The Klein family, led by patriarch Samuel Klein, a Holocaust survivor who founded Brazil's top appliances retailer Casas Bahia in 1952, held a 47 percent stake in Via Varejo before the deal. The Klein's plan to carry out the divestiture through the sale of units was approved by Via Varejo's board in June.

Each unit, which includes one common share and two preferred shares, will start trading on the São Paulo Stock Exchange under the symbol "VVAR11" from Dec. 16.

($1 = 2.34 Brazilian reais) (Reporting by Guillermo Parra-Bernal and Marcela Ayres; Editing by Gary Hill and Leslie Adler)

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