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Carrefour's Brazil unit seeks up to $1.7 billion in IPO
June 28, 2017 / 9:09 PM / 2 months ago

Carrefour's Brazil unit seeks up to $1.7 billion in IPO

A general view is seen of a Carrefour store in Sao Paulo December 24, 2013.Paulo Whitaker

SAO PAULO/PARIS (Reuters) - French retailer Carrefour SA's Brazilian unit has filed for an initial public offering that could raise 4.5 billion to 5.6 billion reais ($1.4 billion to $1.7 billion) next month, making it Brazil's biggest listing in over four years.

In a statement, Boulogne Billancourt-based Carrefour (CARR.PA) suggested a price tag of 15 to 19 reais per common share of Grupo Carrefour Brasil SA. The IPO will take place in São Paulo Stock Exchange's strictest governance listing chapter.

At the top of the range, Carrefour Brasil would be worth 37.6 billion reais, twice the market value of GPA SA, controlled by archrival Casino Guichard Perrachon & Cie (CASP.PA). Reuters reported in January that Carrefour aimed to price the unit's IPO at a minimum 25 percent premium to GPA.

The IPO should help Carrefour Brasil add financial muscle to take on GPA, whose food division has recovered amid sliding sales of appliances. Carrefour Brasil recently trumped GPA as Brazil's No. 1 diversified retailer.

The transaction, slated to price July 18, seals the first phase of an association between Carrefour and Brazilian retail tycoon Abilio Diniz that started in 2014 and involved revamping the unit's business model.

Trading in Carrefour Brasil's shares is slated to start on July 20 under the symbol CRFB3. Under terms of the offering, parent company Carrefour and Diniz's Península Participações SA will offer about 91 million existing common shares of Carrefour Brasil in a secondary offering, with proceeds going to shareholders. Diniz could trigger a supplementary allotment of 59 million shares.

Carrefour Brasil plans to sell 205.882 million new shares in a primary offering whose proceeds will go to the company's coffers.

DINIZ FAMILY

Diniz, whose family founded GPA, is Carrefour's third largest shareholder and has a board seat. Diniz and his family bought a 10 percent stake in Carrefour's Brazilian unit through Peninsula in December 2015.

Carrefour hired the investment-banking unit of Itaú Unibanco Holding SA (ITUB4.SA) to underwrite the offering alongside JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N) and Goldman Sachs Group Inc (GS.N). Other advisors include BNP Paribas SA (BNPP.PA), Banco Santander Brasil SA (SANB11.SA) and Banco Bradesco SA (BBDC4.SA).

The Carrefour Brasil IPO would be Brazil's biggest since the 11.475 billion-reais debut of state-controlled insurer BB Seguridade Participações SA(BBSE3.SA) in April 2013. This year, three IPOs have been priced, the most in four years.

Brazil's busiest pipeline of bond and equity offerings in at least six years comes as investors have grown more confident that the country can emerge from its steepest recession ever.

Additional reporting by Alberto Alerigi Jr in São Paulo; editing by David Gregorio

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