VisaNet IPO counts on Brazil's credit zeal
Card use grows 20% a year
June 23, 2009
By Telma Marotto Sao Paulo
Visa's Brazilian affiliate plans to sell stock in the world's biggest initial share sale in a year, seeking to tap investor demand in a nation where credit card use is growing more than 20 percent annually.
Shareholders of Brasileira de Meios de Pagamentos, the Sao Paulo-based processor of payments for the largest credit card network, aim to raise up to 7.2 billion reais (R31bn) on Thursday's sale. The offering would be the largest since OGX Petroleo & Gas Participacoes raised 6.7 billion reais last June, the equivalent of $4bn (R33bn) at the time, and could set a record in Brazil if investors buy at the upper end of the price range.
Clecius Peixoto of Emerging Markets Management in Virginia said: "This deal incorporates several things that investors are looking for. It offers exposure to Brazil, and has a powerful theme - the prospect of greater use of cards."
Brazil's credit card market expanded 22 percent last year and about 20 percent every year since 1995, after the government introduced a new currency pegged to the dollar to bring down inflation from 5 000 percent a year, according to data compiled by Itau Unibanco, the nation's largest bank.
Record low interest rates might keep demand growing as Brazil's economy pulled out of its first recession since 2003, said Carlos Camacho of GAP Asset Management in Rio de Janeiro.
VisaNet, as the firm is known, is selling shares as Brazil's Bovespa stock index heads for its best quarterly gain since July to September of 2005.
The index is up 26 percent this quarter and 37 percent for the year after losing a record 41 percent last year.
San Francisco-based Visa, which owns 10 percent of VisaNet, raised $18bn in its initial public offering (IPO) last March, a US record.
VisaNet's offering of 478 million shares would price at the high end of the 12 reais to 15 reais range because of prospects Brazil's credit card market, with 224billion reais in purchases, would keep expanding, Camacho said.
"The use of credit cards is directly linked to the consumption, and the prospect for the consumer market in Brazil is very good," said Camacho, who is seeking to buy VisaNet shares in the IPO. "From what we are hearing in the market, demand for this stock is hot."
Clients who in previous IPOs set aside 30 000 reais to buy shares reserved 100 000 reais for the VisaNet deal, said Renato Bandeira de Mello of Futura Corretora in Sao Paulo.
The IPO is the first in Brazil since Rio de Janeiro-based OGX's record offer. The number of new share sales slid to four last year from 64 in 2007 on the deepening financial crisis, and sent the Bovespa plunging. The measure has rallied this year on speculation interest rate cuts and increased commodity demand will fuel growth in Latin America's biggest economy.
International investors poured 10 billion reais into the market this year as of last week, according to exchange owner BM&FBovespa, including a record 6 billion reais last month.
The success of the VisaNet sale could spur other IPOs in the country this year, said Alberto Kiraly of the National Investment Bank Association in Sao Paulo.
"We may see other IPOs in this same line of large transactions … because it indicates a good liquidity level," Kiraly said. - Bloomberg
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