January 7, 2020 / 11:48 AM / 16 days ago

Brazilian state lender Caixa picks banks for insurance unit IPO: sources

SAO PAULO (Reuters) - Brazilian state lender Caixa Economica Federal has chosen the bank syndicate that will manage the initial public offering (IPO) of its insurance unit, three sources with knowledge of the matter said.

Morgan Stanley will lead a 10-bank syndicate including the investment banking units of Banco Bradesco SA, Itau Unibanco Holding SA, Banco Plural, Banco BTG Pactual, Banco do Brasil SA, Credit Suisse AG, Banco Santander Brasil SA, Bank of America and Caixa Economica Federal, the sources added, requesting anonymity.

Insurance unit Caixa Seguridade will be listed in Brazil, although the banks expect to market the offering in the United States also. The banks expect to value it at around 60 billion reais ($14.77 billion), the sources said.

Caixa Economica Federal did not reply to a request for immediate comment.

Caixa plans to sell a stake of about 10 billion reais in the insurer. Caixa Seguridade will not raise cash by issuing new shares, the sources said.

Caixa CEO Pedro Guimaraes wants an IPO in the short term, in March or April, but Caixa Seguridade still needs to sign agreements with private insurers to sell different kinds of insurance to its clients.

Caixa on Monday announced an agreement with Japan’s Tokio Marine to sell home insurance to its clients. Tokio Marine will pay 1.5 billion reais to Caixa.

Caixa Seguridade posted a net income of 1.2 billion reais for the first nine months of 2019.

The company will join BB Seguridade, controlled by state-controlled lender Banco do Brasil, on Brazil’s B3 stock exchange.

($1 = 4.0619 reais)

Reporting by Carolina Mandl and Tatiana Bautzer; editing by Jason Neely

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