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.