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* Biosev suspends IPO pricing indefinitely on demand * Had suggested one-day delay would muster bidding * Signals caution among investors over Brazil IPOs By Joan Magee and Guillermo Parra-Bernal NEW YORK/SAO PAULO, July 19 (Reuters) - Biosev, the Brazilian unit of global commodities company Louis Dreyfus Corp , suspended on Thursday its initial public offering for an indefinite period, citing a lack of demand from investors. Demand for the IPO faltered only hours before it was priced, a source told International Financing Review, a Thomson Reuters publication specializing in capital markets and corporate finance transactions. Louis Dreyfus had filed to sell as many as 55.64 million common shares of Biosev, in a transaction that could raise up to $548 million. The offering was scheduled to price before midnight on Wednesday, but early on Thursday the company sought to revive the deal by postponing pricing by one more day. Yet, deteriorating market conditions forced Biosev to suspend the deal, Chairman Kenneth Geld said in a statement. "The uncertainties in financial markets were behind our decision," Geld said in the statement. "We are sure that, once the economic picture gets better, many opportunities to execute our IPO will arise." The decision signals that investors, who last year steered clear of most IPOs in Brazil as Europe's debt crisis worsened, may keep shunning companies with great ambitions but insufficient track records, poor earnings visibility, or vulnerability to a downturn. The suspension also deals a blow to Louis Dreyfus in its attempt to raise cash to expand its output of sugar cane and ethanol. Even global companies with outstanding track records, such as the 160-year-old French company, are not exempt from investor skepticism over IPOs in Brazil. Instead of IPOs, more investors have been buying Brazilian follow-on offerings, where risk is easier to assess. "We just didn't have the book," the source, who requested anonymity because the decision had not been made public yet, told IFR late on Wednesday. Biosev had hired the investment banking units of Banco Bradesco, Itaú Unibanco Holding, Banco Votorantim, Banco do Brasil, Banco Santander and JPMorgan Chase & Co to manage the transaction. The banks were entitled to earn about $16.2 million in fees from the IPO, according to data provided by the securities regulator CVM. CASUALTY OF THE CRISIS Louis Dreyfus was one of the first multinational groups to enter Brazil's cane sector, when it snapped up the ailing Santelisa Vale milling group in 2009 in what many industry specialists thought was a steal in the wake of the global financial crisis. Santelisa Vale, which was considered the crown jewel of the sector and had some of the most modern and efficient mills at the time, was recently renamed Biosev in advance of Louis Dreyfus' planned spinoff of the unit. Many milling groups and investors in Brazil had highly leveraged their expansion plans when oil reached $147 a barrel in early 2008, at the start of the worst global financial crisis in eight decades. They were devastated when credit markets seized up later that year. Falling sugar prices and losses from ethanol production due to the Brazilian government's decision to hold down fuel prices have also contributed to continued fragility in the cane sector. Biosev owns 11 mills across the southeastern states of Sao Paulo and Minas Gerais and two others in the northeast. All but one produce both sugar and ethanol. Combined annual output is about 2.8 million tonnes of sugar and 1.8 billion liters of ethanol. The Biosev IPO had a suggested price tag of 16.50 reais to 20.50 reais a share, but investors who expressed early interest were looking to pay below that range, another source with no direct involvement in the deal, told Reuters late on Wednesday. The deal was originally scheduled to price on June 28, but was put off as risk aversion intensified. The proximity to another deal, the $955 million IPO of power utility Transmissora Aliança de Energia Elétrica that is slated to be completed later on Thursday, might have scared potential investors away from Biosev's offering, the second source added. A source with knowledge of the deal said pricing and demand for shares of Transmissora, or Taesa, stock "look pretty strong" at this point, with firm orders from investors topping by more than three-fold the amount of shares being offered.