Brazilian insurer Caixa Seguridade SA decided on Monday to cancel its initial public offering, two sources with knowledge of the matter said, amid concerns about the new coronavirus and plunging oil prices.
Controlling shareholder state bank Caixa Economica Federal had been planning to list the insurer in April, but has decided to push it back in three to six months, both sources said, speaking on condition of anonymity because the discussions are not public yet.
The Caixa Seguridade IPO had been expected to raise more than 10 billion reais ($2.12 billion), making it the biggest expected Brazilian initial share offering for 2020.
Caixa did not immediately respond to a request for comment.
The setback may dampen bankers’ hopes for a record year for IPOs and follow-ons. The expectation that more domestic investors could invest in stocks amid Brazil’s lowest interest rates on record and a more robust economic growth outlook had led a series of companies to test the markets.
Bankers were expecting nearly 200 billion reais in share offerings this year. Homebuilders, banks, parking lot operators and retailers are among the 25 companies that have filed for IPOs with Brazil’s securities regulator this year.
A potential delay to the Caixa Seguridade IPO could also represent a blow to the government of President Jair Bolsonaro, which had hoped to raise billions of dollars this year through a series of state asset sales which may now fetch a lower price due to the recent market rout.
Most companies have not yet taken a final decision about going ahead with their IPO plans or pushing the deals back, said three sources, including one of the people with knowledge of the Caixa Seguridade IPO. As companies have already made their preliminary filings with the securities regulators, they can still wait for roughly two weeks before a final decision.
Still, some companies are already nearing moves to pull the plug on planned IPOs, including Banco Daycoval, which had hoped to raise $1 billion in a stock flotation in the coming weeks, a source close to the bank said.
Banco Daycoval did not immediately respond to a request for comment.
($1 = 4.7247 reais)
(Reporting by Carolina Mandl and Aluisio Alves in Sao Paulo; editing by Christian Plumb and Matthew Lewis)
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