(Bloomberg) Carlyle Group LP (CG) plans to overcome a slowdown in Latin America’s largest economy by reviving an initial public offering for its Brazilian travel agency after shelving the sale last year.

The private equity firm, led by billionaire David M. Rubenstein, and other investors in CVC Brasil Operadora e Agencia de Viagens SA are seeking to raise as much as 1 billion reais ($418 million) in the IPO today, according to a Nov. 13 regulatory filing. Carlyle withdrew a planned sale last year, citing “unfavorable” market conditions.

Enlarge image Pacaembu Stadium

CVC said in its prospectus that tourism will pick up when Brazil hosts the 2014 World Cup soccer tournament and 2016 Olympic Games.

CVC’s sale would be the country’s 10th IPO in 2013 after offerings earlier this year raised $8.2 billion, more than triple last year’s total, even as volatility in the world’s worst-performing major stock market prompted companies including Votorantim Cimentos SA and Azul Linhas Aereas Brasileiras SA to cancel sales. CVC said in its prospectus that tourism will pick up when Brazil hosts the 2014 World Cup soccer tournament and 2016 Olympic Games.

“If they thought the moment for an IPO last year was unfavorable, maybe now things are just as bad, or even worse, which will probably have quite an impact on the demand,” Rodolfo Amstalden, an analyst at Empiricus Research said in a phone interview from Sao Paulo. “Everybody seems very pessimistic about Brazilian equities, and this is overshadowing all the excitement about the World Cup and the Olympics.”

Growth Forecast
While the sporting events could provide a temporary boost, signs that the country’s recovery is losing momentum even after President Dilma Rousseff intervened to stimulate growth may discourage investors from buying the stock, Amstalden said.

Brazil’s 0.5 percent decline in gross domestic product in the third quarter from the previous three months was the biggest contraction since 2009, according to data the national statistics agency released this week. Economists in a weekly central bank survey forecast a 2.5 percent expansion in GDP this year, down from a projection of 3.26 percent in January.

Education company Ser Educacional SA was the last Brazilian company to do an IPO, selling shares in October. After the best start of a year since 2007 with seven sales through July, offerings tapered off as the Ibovespa posted the worst performance among the world’s 20 biggest equity benchmarks, sinking 17 percent in 2013. Brazil’s gauge rose 1.2 percent at 3:17 p.m. in Sao Paulo.

Booked Sales
Market conditions in Brazil aren’t favorable for IPOs in general and are even worse for offerings such as CVC’s, in which private investors are selling their stock instead of the company issuing equity to raise capital, Amstalden said. In addition to Carlyle, which owns 63 percent of voting shares, the travel agency’s founder Guilherme de Jesus Paulus is selling part of his stake.

“It doesn’t really help to attract investors if the company apparently doesn’t need additional capital and controlling shareholders are the ones selling the shares,” Amstalden said.

The Santo Andre, Brazil-based travel agency said the company won’t provide additional comments beyond those made in the prospectus, citing regulatory restrictions before the share sale. Carlyle declined to comment on the offering in an e-mailed response to questions.

CVC, which says it is the country’s biggest travel agency, had booked sales of about 4 billion reais in 2012, and of 3.3 billion reais this year through September, according to the IPO prospectus. About 67 percent of customers are from Brazil’s “growing middle class,” the company said.

‘Well Positioned’
“The domestic tourism market has benefited from the increased purchasing power of families,” the company said. “We’re well positioned to continue to benefit from the growing demand for products and services by the middle class.”
CVC said in the prospectus that Brazil estimates about 600,000 foreign tourists and “millions of Brazilians” will travel for the World Cup, while the Olympics should generate $3.3 billion for Rio de Janeiro’s tourism industry. About 62 percent of the first lot of tickets sold for the World Cup went to Brazilians, according to the tournament organizer FIFA.

While Rousseff’s initiatives to boost consumption through tax breaks and subsidies are limited by a widening budget deficit, Brazil still has “a few years” before those policies will be reversed, meaning that the outlook for companies that depend on domestic demand such as CVC is still positive, said Joao Pedro Brugger, a portfolio manager at Leme Investimentos.

Consumption Growth
“Even if GDP growth is not that strong, consumption has performed better than the broader economy, and this will probably continue to be the case for a few years,” Brugger said in a phone interview from Florianopolis, Brazil. “There’s a limit to how much you can boost growth to consumption through stimulus, but we’re not there yet.”
Brugger declined to say if he was buying shares in the IPO.

Family and government consumption grew by 1 percent and 1.2 percent respectively in the third quarter, the national statistics agency said. Consumption will be higher in the fourth quarter, finance minister Guido Mantega said on a conference call on Dec. 3.

Investors still have “question marks” about the growth outlook for Brazil, pushing valuations lower and making it a difficult moment for newcomers, according to Will Landers, the Princeton, New Jersey-based senior portfolio manager at BlackRock Inc.

“It’s a tough market,” Landers said in a telephone interview. “You have a lot of cheap stocks that are already listed companies that you know well. New companies that don’t have the track record are going to have to come with an interesting discount for the transactions to get done.”

Landers declined to comment if he was buying into the IPO, saying BlackRock looks into all offerings.