| SAO PAULO
SAO PAULO Brazilian securities firm XP Holding Investimentos SA is seeking a valuation range between 12 billion reais and 20 billion reais ($3.9 billion and $6.4 billion) for a domestic initial public offering slated for late May or in June, two people with direct knowledge of the plan said.
Depending on investor demand in the run-up to the offering, shareholders, led by U.S. buyout firm General Atlantic LLC, could sell an undetermined stake in a private placement prior to the IPO, the people said, asking not be identified since talks on the matter remain private.
There is interest in a private sale from a group of so-called anchor investors, said one of the people, declining to elaborate. XP is targeting a free-float rate, or a ratio of shares in circulation, equivalent to 30 percent of capital, the people added.
Letting other investors enter XP before the IPO could provide support for valuations, one of the people said. Proceeds will go towards fueling XP's growth into asset management, banking and other financial services, the people said.
The media office of XP declined to comment, citing a quiet period relating to the transaction. General Atlantic, which has a 49 percent stake in the firm, also declined to comment.
Founded in 2001 by partner and Chief Executive Officer Guilherme Benchimol as an independent stock brokerage, XP has expanded into securities trading and custody, money management and financial advisory as peers shrunk dramatically in the face of tumbling fees and a declining client base.
Rising volatility and reduced activity in equities and other financial products have triggered years of losses for independent broker-dealers, or brokers with no links to commercial baking groups, according to central bank data.
One of the people said XP earned net profit of about 500 million reais last year. The figure could not be independently verified by Reuters.
XP hired the investment banking units of Morgan Stanley & Co (MS.N), Grupo BTG Pactual SA (BBTG11.SA), JPMorgan Chase & Co (JPM.N) and Itaú Unibanco Holding SA (ITUB4.SA) to lead the offering's underwriting, the people said.
The São Paulo-based securities firm, whose brokerage unit is headquartered in Rio de Janeiro, is in the process of picking other banks to work on the deal, the people said. An announcement will come within a month, they said.
The banks declined to comment.
(Editing by Guillermo Parra-Bernal and Bernadette Baum)