May 5, 2017 / 9:22 PM / 6 months ago

Brazil's BR Malls plans $536 mln offering, source says

SAO PAULO, May 5 (Reuters) - BR Malls Participações, Brazil’s largest mall operator, has hired banks to sell 1.7 billion reais ($536 million) worth of new shares in an offering as early as next week, a person with direct knowledge of the matter said on Friday.

Rio de Janeiro-based BR Malls has hired the investment-banking units of Banco Bradesco SA, Itaú Unibanco Holding SA, JPMorgan Chase & Co, Banco Santander Brasil SA and Morgan Stanley & Co to underwrite the so-called restricted-efforts offering, which is limited to qualified investors, said the person.

BR Malls declined to comment. The banks did not have an immediate comment on the primary offering in which all proceeds from the transaction go to the company’s coffers.

The person asked to remain anonymous, because the transaction remains private.

The move comes as several mall companies raise cash to buy cash-strapped rivals or undertake new projects as domestic borrowing costs approach single-digits levels. Commercial real estate firms benefit from lower interest rates, which make their projects and investments more profitable over time.

More than 10 billion reais have been raised through stock sales in Brazil this year, making this the best start for domestic equity offerings for any year since 2013. Government efforts to rebalance fiscal accounts are drawing money back into Brazil, even though the country is struggling with a recession that is entering a third year.

Public offerings with restricted efforts differ from standard equity offerings in that a company does not have to request registration of the plan with securities industry watchdog CVM. Only qualified investors can participate in such offerings, and the deals cannot be marketed through road shows or the media.

Common shares rose 5.6 percent to 12.67 reais on Friday, extending this year’s gains to 22 percent.

The financial news service of O Estado de S. Paulo newspaper reported the news earlier in the day.

$1 = 3.1740 reais Reporting by Tatiana Bautzer; Additional reporting by Alberto Alerigi Jr and Paula Arend Laier in São Paulo; Editing by Guillermo Parra-Bernal

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