Hopes grow for a break in Brazil’s drought on stock market listing
“There is a huge pent-up demand because we haven’t had an IPO in Brazil for more than two years,” says Roderick Greenlees, global head of investment banking at Itaú BBA. “I expect something to happen in the first half of this year. Our base case is somewhere between three and five IPOs in 2024.”
“Most EM funds are overweight in Brazil and positions have increased over the past year,” says Pablo Riveroll, head of LatAm equities at Schroders. “Money from local investors is likely to move back into equities as prices fall, probably accelerating once in single digits,” he adds. “The market expects that to happen towards the middle of the year, so that’s probably when IPO activity accelerates.” However, investors will pay attention to the poor performance of recent companies.
Only 14 of the 69 from 2020 and 2021 still trading are in positive territory, according to Nord Research. Fiscal concerns also remain, given the government’s promises of extra spending. The BCB has said that orderly public accounts are essential for it to continue lowering interest rates. Eduardo Figueiredo, head of Brazilian equities at Abrdn, sees potential for IPOs in underrepresented sectors such as agriculture, technology, healthcare or infrastructure.
He believes investors will be more discerning, preferring companies that are already profitable and making money. “Discipline will be higher this time because capital is more expensive globally,” he says.
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