BofA sees ‘spectacular’ $31b year for Brazil equity deals

Bloomberg

Brazilian equity offerings will probably top 159 billion reais ($30.7 billion) this year, blowing past 2020 as the strongest year ever, according to Bank of America Corp (BofA).
Corporate share sales already total 126 billion reais through August 30, up 40% from the same period in 2020, data compiled by Bloomberg show. Initial public offerings (IPOs) reached a record, while firms from retailer Magazine Luiza SA to hospital operator Rede D’Or Sao Luiz SA have turned to additional equity offerings to fund acquisitions and post-pandemic growth.
“It’s a spectacular year in which the capital markets are really a lever for Brazil’s economic growth,” Bruno Saraiva, BofA’s co-head of investment banking for Brazil, said in an interview. “A substantial part of the proceeds have been used by companies to fund investments and expansion plans,” he said, in contrast to
last year, when shareholder
divestitures accounted for a large portion of the total.
After a strong second quarter, Saraiva expects a “less
intense” next few months, especially as central bank raises the country’s interest rates to tame inflation.
“As rates rise, the market has become more skittish,” he said. “But even with more picky investors, the window is still open for good stories at the right valuation,” he said, citing sectors such as consumer, health care and technology as probable issuers.
Fourty-five Brazilian firms went public this year, and about 30 have lined up for a local listing. BofA ranks third among Brazil stock underwriters so far this year, according to data compiled by Bloomberg. The bank participated in eight of the 10 biggest sales, including the 6.9 billion-real IPO from biofuel company Raizen SA, the biggest this year, the data show.
The Charlotte, North Carolina-based bank has doubled its investment-banking team in Brazil during the past 24 months, and sees room to keep expanding, according to Saraiva. The plans include beefing up a local fixed-income business as well as its mergers-and-acquisitions advisory operation.
“When a company raises capital, the next step tends to be an acquisition, so we expect M&A activity to increase,” Saraiva said.

Bank of america’s Head of Global Banking to
Retire at Year-End
BofA Chief Operating Officer Thomas Montag and Vice Chairman Anne Finucane — executives who helped orchestrate the second-largest US bank’s resurrection after the 2008 financial crisis — plan to retire, clearing the way for a new generation of senior leaders.
Montag, who long led the firm’s massive investment banking operations, and Finucane, who oversaw strategy and initiatives including a push into sustainable finance and investing, will vacate their posts at the end of the year, the company said . It promised to pick replacements in coming weeks.
Despite their posts near the top, Montag, 64, and Finucane, 69, haven’t widely been seen as potential CEO candidates in recent years, except in an emergency. But whoever gets elevated to their spots would be added to the list of people who could eventually replace CEO Brian Moynihan, who turns 62 in October.
The two executives “have been instrumental in Bank of America’s success, especially during the decade following the financial crisis,” the bank said.
The result is that they have both amassed expansive lists of responsibilities in that time — creating the possibility that their duties could soon be parceled out among a list of senior executives, according to a person with knowledge of the bank’s thinking. Positions such as chief operating officer or president of the investment bank can also be split among a few executives.
Finucane, one of the most senior women in US banking, entered through predecessor company Fleet Bank and has been responsible for the company’s strategic positioning, sustainable finance, environmental, social and governance, capital deployment and public policy efforts.
Montag joined Bank of America through its Merrill Lynch acquisition in 2008 after more than two decades at Goldman Sachs Group Inc. Also serving as president of global banking and markets division, he’s widely seen as loyal to traders and dealmakers.