SAO PAULO Brazilian logistics firm Vix Logistica SA has decided to shelve plans for an initial public offering this year because of lukewarm demand, a source told Reuters on Friday, another sign of how many investors have cooled on Brazil's stagnant economy.
The pricing for the Vitoria, Brazil-based firm's IPO had been expected to take place in April and was seen raising in the range of 600 million reais ($300 million). Its cancellation will dampen hopes for a revival in IPOs after a down 2012, although several other companies still plan to move forward.
A source with knowledge of the decision said Vix had faced doubts from investors primarily because Brazil's economy grew less than 1 percent last year, and an uncertain outlook for 2013 made the company's medium-range business plan seem murky.
"With an economy that's not growing, there's a lot of skepticism about Brazil right now," the source said on condition of anonymity.
The relatively small size of the IPO also failed to stir major institutional investors who increasingly prefer $1-billion-plus offerings because the Brazilian market often isn't liquid enough to satisfy them, the source said.
Vix plans to formally notify Brazil's securities regulator of its plans to abandon the IPO process later on Friday or in coming days, the source said. International Financing Review, a division of Thomson Reuters, also reported Vix would cancel its IPO plans.
A Vix spokesperson said the company had no immediate comment.
After a decade of remarkable expansion, Latin America's biggest economy has slowed to a crawl in the past two years due to falling investment, tapped-out consumers and misgivings over left-leaning President Dilma Rousseff's treatment of businesses.
Growth is expected to exceed 3 percent this year, although an energy crisis caused by a severe drought has increased uncertainty over whether a real turnaround will materialize.
IPO MARKET HAS STRUGGLED
Seen for most of the last decade as a symbol of Brazil's buoyant capital markets, IPOs have languished as prices sank for many names that went public.
Last year, IPO activity in Brazil fell to the lowest since 2005: a total four share offerings raised about 5.1 billion reais, Thomson Reuters data showed. In 2007, a record year for the market, companies raised 55.7 billion reais in proceeds from share sales in 64 transactions, the data showed.
Investors have said they likely will keep shunning IPO plans for companies with high ambitions but an insufficient track record, poor earnings visibility or vulnerability to a downturn.
Vix hired the investment banking units of Itau Unibanco Holding SA (ITUB4.SA), BTG Pactual Group (BBTG11.SA), Credit Suisse Group CSGN.VX, Banco do Brasil SA (BBAS3.SA) and Banco Bradesco SA BBDC4.SA to handle the transaction.
Vix planned to use the proceeds for expansion and other general corporate purposes, as it seeks to grow its logistics, fleet management, vehicle transport and charters services. The company, which is focused in the coastal Brazilian states of Espirito Santo, Bahia and Rio de Janeiro, is currently expanding into Sao Paulo and Minas Gerais states.
Other companies that could still stage IPOs this year include Votorantim Cimentos, Brazil's largest cement-maker, and the insurance and annuities unit of Banco do Brasil.
(Additional reporting by Guillermo Parra-Bernal; Editing by Todd Benson, Jeffrey Benkoe, Leslie Adler and Andrew Hay)