November 24, 2017 / 2:05 PM / in a year

UPDATE 1-Brazilian toy retailer Ri Happy prepares $300 million IPO -paper

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SAO PAULO, Nov 24 (Reuters) - Brazil’s largest toy retailer, Ri Happy Brinquedos SA, owned by U.S. private equity firm Carlyle Group LP, has hired banks for an initial public offering, seeking to take advantage of a retail rebound in Brazil, Valor Economico newspaper reported on Friday.

The IPO is expected to raise 800 million to 1 billion reais ($310 million), according to preliminary projections, the newspaper said, citing unidentified sources. The company expects to go public on the first quarter of 2018.

Carlyle has hired the investment banking units of Grupo BTG Pactual, Goldman Sachs & Co, Itaú Unibanco Holding SA, Credit Suisse Group AG and Banco Bradesco SA as underwriters, according to the report.

The proceeds will be used to fund expansion and Carlyle also will sell part of its stake in the company.

Contacted by Reuters, Goldman Sachs, Carlyle and Bradesco declined to comment. The other banks did not immediately respond to requests for comment.

Retail and Brazil’s consumer sector generally are on the leading edge of an economic recovery in Latin America’s largest economy.

Carlyle acquired Ri Happy and smaller rival chain PB Kids in 2012, betting that sales would continue rising solidly after an 8 percent increase that year.

But the sector suffered as Brazil fell into its deepest recession in a century. In 2016, retail sales posted their worst result in at least 15 years.

Other specialty retailers, such as sports goods chain Lojas Centauro, owned by Grupo SBF SA, are taking advantage of higher investor demand to raise capital for expansion plans. Some of these retailers are emerging from debt restructurings.

Several Brazilian companies that have recently filed for IPOs say they will use proceeds to fund expansion plans. That is a welcome change when compared to similar transactions earlier this year, which were mostly aimed at repaying debts.

Ri Happy’s IPO also would be one in a series of IPOs at the end of 2017. Companies are racing to go public amid concerns a wide-open 2018 election may cool demand for new stock issues, Reuters reported on Nov. 14.

Electronics retailer Magazine Luiza SA and supermarket chain Carrefour Brasil have unveiled expansion drives, adding to signs of economic recovery after Brazil’s harshest recession in a century.

$1 = 3.22 reais Reporting by Tatiana Bautzer and Gram Slattery; Editing by Jason Neely and Bill Trott

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