Brazil’s Arezzo Raises $339M in IPO

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(Reuters) January 31, 2011 – Arezzo Industria e Comercio SA, Brazil’s largest women’s shoe retailer, and its shareholders raised 565.8 million reais ($339 million) in an initial public offering, kicking off a busy period for the country’s capital markets.

Arezzo sold 10.3 million new voting shares in a primary offering at 19 reais each, at the top end of the proposed range of 15 reais to 19 reais. The company had filed to sell 10.29 million shares, with underwriters having the option to sell 7.72 million in additional stock to meet investors’ demand.

Shareholders sold an additional 19.5 million existing shares.

Arezzo’s stock (ARZZ3.SA) will begin trading on the Sao Paulo stock exchange on Feb. 2.

The company is tapping the market as investors’ appetite for riskier emerging market securities gains steam, after a mixed year in 2010 in Brazil. The country should have one to two IPOs a week on average through April, the chief executive of exchange operator BM&FBovespa (BVMF3.SA) said on Monday. [ID:nN31226089]

Apart from Arezzo, 15 other companies have filed to sell stock in Brazil in 2011, including eight through IPOs. Also going public this week in Brazil are shopping mall operator Sonae Sierra Brasil (SSBR3.SA), pricing its IPO on Tuesday, followed by autoparts maker Autometal (AUTM3.SA) on Thursday.

Brazilian companies sold 152.2 billion reais ($90.9 billion) of stock in 2010, with most funds coming from the record $70 billion raised by state-run oil company Petrobras in a follow-on offering in September.

The country had 24 offerings last year, down from a peak of 76 in 2007, as concerns over debt troubles in Europe and a slowdown in the United States weighed on Brazilian markets. The number of offerings also fell as companies put their share sales on hold for fear of competing with the massive Petrobras transaction.

Arezzo plans to use 42 percent of the IPO proceeds to open new stores and expand existing ones, while 37 percent of the funds will be used to finance takeovers. The company said 12 percent of the funds will go to finance its working capital and the remaining 9 percent will be used on “operational improvements.”

Itau BBA, the wholesale and investment banking unit of Itau Unibanco (ITUB4.SA) led the offering, with Bank of America Merrill Lynch (BAC.N), Credit Suisse (CSGN.VX) and Barclays Capital also helping to underwrite the sale, according to the prospectus.

The banks stood to earn about 28 million reais in fees from the Arezzo stock sale, or 5 percent of the total offering, according to the prospectus. ($1=1.673 reais)

Reporting by Cesar Bianconi, Writing by Elzio Barreto