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Companies sell minority stakes to fund expansion

Writer's picture: Seneca Evercore | NotíciasSeneca Evercore | Notícias

(Valor Economico) These transactions already represent 35% of mergers and acquisitions operations in the year up to October; in 2021 they were 6% of the total


By Fernanda Guimarães and Monica Scaramuzzo — From Sao Paulo


With the market closed for IPOs on the Brazilian stock exchange for more than three years, a group of companies have resorted to selling minority stakes to raise funds to fund their expansion. Minority transactions accounted for 35% of mergers and acquisitions (M&As) this year, up to October, compared to 23% and 16% in 2022.


In 2020 and 2021, when the market was fully open due to ample liquidity, including for operations considered small, the percentage was 7% and 6% respectively, according to a study conducted by Seneca Evercore, at the request of Valor.

In some cases, according to experts consulted, companies are also seeking an assessment prior to an IPO, awaiting a reopening of initial public offerings (IPOs), which is currently projected for 2025. In others, the company is seeking to improve its capital structure. This, for example, was the reason behind CSN's decision to sell a stake in its subsidiary CSN Mineração.


Among the cases already on the table, pharmaceutical company Cimed hired JP Morgan to find a buyer for a minority stake, something that is expected, according to market sources, to attract private equity funds (which buy shares in companies). Rio Grande do Sul-based Peccin, owner of the chocolate brand Trento, also mandated UBS BB to structure the sale of a stake, as previously reported by Valor. When contacted, the companies did not comment.


Another emblematic case is Compass, Cosan's gas division, which was in line for an IPO, and which also intends to sell a minority stake - there is interest from investors, the founder and chairman of the conglomerate's board of directors, Rubens Ometto, told Valor.


Among fintechs, the trend has also been observed. Act Digital is looking for a partner to continue its expansion. Warburg Pincus bought a minority stake in Contabilizei (secondary sale) and MeuTudo also wants to find an investor, with a bank working on the operation, according to sources. Agibank, another awaiting an IPO window, is with Goldman Sachs for a minority sale. The companies did not comment on the processes.


Seneca Evercore partner Daniel Wainstein says the increase in minority transactions is also explained by shareholders’ decision to sell their companies. However, with the fall in asset values, the decision has been to sell off only a portion of the company at the moment. “The current market perspective is that transactions that were previously considered to be controlling transactions have ended up migrating to the sale of minority stakes, partially meeting shareholders’ wishes and reserving a 100% sale for a more constructive market moment.”



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