Compass is poised to end Brazil's nearly five-year IPO drought

Cosan

07/05/2026 20:08

By Luciana Magalhaes

SAO PAULO, May 7 (Reuters) - Compass Gas e Energia SA, controlled by conglomerate Cosan SA CSAN3.SA, is set to price its initial public offering on Thursday, breaking a nearly five-year IPO drought on Brazil's B3 stock exchange caused by high interest rates.

The offering of 89.3 million shares held by existing shareholders of the natural gas distributor could raise around 3 billion reais ($600 million), according to two people familiar with the transaction.

By early afternoon Thursday, orders were nearly three times the size of the offering, one of the people said. Despite the strong demand, however, the second source added that pricing could land at the lower end of the range, at 28 reais per share.

The offering was to be priced at 28 reais to 35 reais per share, with a sale at the top end implying a valuation of around 25 billion reais.

If completed as expected, Compass's offering will mark the first IPO on Brazil's stock exchange since September 2021, when companies including Raizen RAIZ4.SA, the world's largest sugar producer, went public.

The Compass offering fits into Cosan's broader push to sell assets and cut leverage, as high interest rates have weighed on the group's results.

Cosan will use about 75% of the total IPO proceeds to pay down debt, one of the people said.

Cosan tried an IPO in 2020 but shelved the offering due to unfavorable market conditions.

Despite the prolonged local IPO drought, Brazilian companies like Picpay, a digital bank owned by the Batista family, and fintech Agibank have launched shares on U.S. exchanges.

But high interest rates and concerns over Brazil's fiscal health stymied several companies that had sought to go public in recent years.

 (Reporting by Luciana Magalhaes; Editing by Cynthia Osterman)

 ((Luciana.NovaesMagalhaes@thomsonreuters.com;))