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UPDATE 1-Hermes Pardini seeks IPO, riding Brazil healthcare wave
December 14, 2016 / 7:18 PM / 9 months ago

UPDATE 1-Hermes Pardini seeks IPO, riding Brazil healthcare wave

(Adds background, details)

SAO PAULO, Dec 14 (Reuters) - Brazilian medical laboratory Instituto Hermes Pardini SA has filed a request for an initial public offering with regulators, a sign domestic healthcare companies are luring investor interest despite escalating political and economic turmoil in Latin America’s largest economy.

In the request filed before securities industry watchdog CVM late on Tuesday, Belo Horizonte, Brazil-based Hermes Pardini did not specify the size of the offering, a suggested price range for the transaction or how much it plans to fetch from the sale.

Under terms of the deal, Hermes Pardini will tender new stock in a so-called primary offering and shareholder Gávea Investimentos Ltda will dispose of an unspecified number of shares in a so-called secondary offer. Primary offers help the company raise money directly, while shareholders partially or fully exit their stakes in an IPO through secondary offers.

The decision to tap equity investors comes as a number of Brazilian healthcare firms are on their way to listing their stock in the São Paulo Stock Exchange or finding strategic partners. Five of Brazil’s largest laboratory, drugstore and healthcare stocks have gained 62 percent this year, well above the benchmark Bovespa index’s 36 percent rise in the period.

While headwinds stemming from Brazil’s harshest recession in eight decades and a political crisis have hurt healthcare companies harder and longer than expected, analysts expect demand for diagnostic and medical services to improve next year.

Brazil’s sole IPO this year came from a company in the sector, underscoring investor optimism on the industry’s outlook. Still, shares of Centro de Imagens Diagnóstico SA , a smaller rival of Hermes Pardini that went public at the end of October, are down 25 percent since then.

Hermes Pardini was founded by the namesake Brazilian doctor in 1959 and is currently 70-percent controlled by his heirs. Rio de Janeiro-based Gávea owns the remaining 30 percent.

The company hired the investment banking unit of Itaú Unibanco Holding SA as the IPO’s lead underwriter, alongside those of Banco Bradesco SA, Bank of America Corp, JPMorgan Chase & Co and Morgan Stanley & Co. (Reporting by Aluisio Alves and Tatiana Bautzer; Editing by Guillermo Parra-Bernal, James Dalgleish and Bernard Orr)

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