Goldman, Morgan Stanley gain clout in Brazil as NY IPOs grow
By Tatiana Bautzer and Carolina Mandl SAO PAULO (Reuters) - Goldman Sachs Group Inc, Morgan Stanley and Bank of America Merrill Lynch are regaining clout in Latin America's largest economy as Brazilian companies opt to list shares in New York instead of on their local exchanges, Refinitiv data shows. U.S.
By Tatiana Bautzer and Carolina Mandl
SAO PAULO (Reuters) - Goldman Sachs Group Inc, Morgan Stanley and Bank of America Merrill Lynch are regaining clout in Latin America's largest economy as Brazilian companies opt to list shares in New York instead of on their local exchanges, Refinitiv data shows.
U.S. banks advised on 56 percent of Brazilian share offerings this year, the data shows, after trailing local banks last year with only 29.7 percent. That means American banks have grabbed a much higher portion of the $280 million in fees paid by Brazilian companies so far this year.
About 27 percent of that went to Goldman Sachs, which managed the country's two largest IPOs of the year: card processing companies PagSeguro and StoneCo Ltd, which listed on the New York Stock Exchange and Nasdaq respectively, followed by Morgan Stanley, with 21 percent.
PagSeguro Digital Ltd's listing in particular was pivotal to convincing Brazilian companies they could win better valuations abroad, bankers say.
The credit card processor is valued at $6.8 billion, ahead of its largest competitor, Cielo SA.
PagSeguro, which describes itself as a "financial technology solution company" was compared by its bankers to companies like digital payments platform PayPal Holdings Inc, which trades at over 45 times earnings.
Even after its shares swooned following its third-quarter earnings report, PagSeguro still trades at 24 times earnings, more than triple Cielo's multiples.
The offering showed the benefit of a U.S. listing for companies with a strong technology component. U.S. exchanges offer more "comparables" like PayPal to help define the stock price and access to technology investors, bankers say.
"We are starting to see Brazilian clients tap NYSE or NASDAQ for their IPOs, especially the tech-related companies. Therefore, it is natural that U.S. banks lead transactions more often", said Pedro Juliano, Brazil head of investment banking at JPMorgan Chase & Co.
The improving IPO scenario reflects wider optimism about recovering capital markets that has several U.S. banks hiring again after slashing staffing during the country's deepest recession in a generation.
Goldman, for example, opened a new office in Rio de Janeiro, the center of Brazil's oil industry, in October, and has hired 15 senior bankers in its Sao Paulo office over the last 18 months.
U.S. listings command higher fees - usually more than 4 percent of the IPO's value - than Brazilian ones, which rarely top this percentage.
For example, Brazilian educational software firm Arco Platform Ltd paid banks 6 percent of its September Nasdaq IPO proceeds.
The shift is also a sign that Brazilian companies have grown less reliant on local banks, which in the past often demanded a piece of any capital markets transaction - like an IPO - as a condition to increase or keep loan lines open.
"Companies do not need so much credit now, and are less inclined to pick banks for their equity transactions based on loans availability," said Hans Lin, head of investment banking in Brazil for Bank of America.
Still, some domestic banks are fighting back.
Itau Unibanco Holding SA, for example, which was named global coordinator for Arco's $220 million IPO, is working to increase its knowledge about tech companies in Brazil to grab potential deals.
"It is counter-intuitive to think that a Brazilian bank will lead a share offering outside Brazil, but it is the case as offerings in Brazil are placed mostly with international investors as well. We are very active in both the U.S. and Brazilian markets," said Roderick Greenlees, global head of investment banking at Itaú BBA.
But local banks may have a tough time reeling in deep-pocketed investors like Warren Buffett’s Berkshire Hathaway Inc and Alibaba’s payment affiliate Ant Financial, both cornerstone investors in StoneCo's $1.5 billion IPO in October.
A final lure of U.S. markets to certain Brazilian startups are capital structures that allow controlling shareholders to keep most voting power. PagSeguro, Stone and Arco all used such structures, which are barred locally.
To see a table of banks' equity advisory activity in Brazil, click on
($1 = 3.8540 reais)
(Reporting by Tatiana Bautzer; Editing by Dan Grebler)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Andrea Shalal WASHINGTON (Reuters) -The United States said on Thursday it would boost public climate finance to help poor countries reduce greenhouse gas emissions and adapt to a changing climate, doubling funding by 2024 from high average levels hit during the Obama administration. The White House said it was embracing "ambitious but attainable goals" for international aid to developing countries, given the urgency of the climate crisis and to compensate for a sharp drop in U.S. funding during the Trump administration.
(Removes extraneous word 'while' in paragraph 3) (Reuters) -Pregnant women infected with COVID-19 and their newborn children face higher risks of complications than was previously known, a study by British scientists showed on Friday. An infection of the new coronavirus in such newborns is associated with a three-fold risk of severe medical complications, according to a study conducted by scientists at the University of Oxford. (https://bit.ly/3tNwkJ7) Pregnant women are at higher risk of complications such as premature birth, high blood pressure with organ failure risk, need for intensive care and possible death
MADRID (Reuters) -Anonymous death threat letters with bullets enclosed in the envelopes have been sent to two of Spain's top security officials and the leader of the hard-left Unidas Podemos party, officials said on Friday, adding police are investigating.