(Reuters) April 28, 2011 – Brazilian appliance retailer Magazine Luiza and shareholders raised 925.8 million reais (US$586M) in an initial public offering to finance acquisitions and store remodeling.
Magazine Luiza and shareholders including buyout firm Capital International sold a total 57.9 million shares at a price of 16 each, according to a securities filing. The number includes the additional lot of stock offered to investors and banks participating as advisors in the deal.
The transaction priced at the bottom of the range of 16 reais to 21 reais proposed by the company on April 7, valuing the nation’s third biggest home appliance retailer at 3.18 billion reais.
The deal comes as other IPOs this year have failed to lure interest from foreign investors — traditionally the main buyers of new equity listings in Brazil — because of growing risk aversion and a perceived glut of shares in local markets.
The investment-banking units of securities firm BTG Pactual [BTG.UL], Itau Unibanco (ITUB4.SA) and Banco do Brasil (BBAS3.SA) advised Magazine Luiza on the transaction.
The retailer, based in the rural town of Franca in Sao Paulo state, has lagged behind rivals in targeting potential acquisitions amid a wave of consolidation in Brazil’s burgeoning home appliance market.
Rivals are merging to win market share more rapidly, negotiate better prices with suppliers and expand in regions outside the traditional axis of Sao Paulo and Rio de Janeiro.
Proceeds from the transaction will be used to fund operations, buy rivals and invest in technology and store remodeling, according to investors briefed by Magazine Luiza executives in recent meetings.
Shares are set to begin trading on the Sao Paulo stock exchange on May 2 under the symbol “MGLU3.”
By Guillermo Parra-Bernal