Brazilian companies hear the siren's call of U.S. stock exchanges
22/12/2021 11:00
By Tatiana Bautzer and Carolina Mandl
SAO PAULO, Dec 22 (Reuters) - Pharmaceutical company Blau
Farmaceutica SA, which listed its shares on Brazil's B3
B3SA3.SA stock exchange in April, has opened its first U.S.
plasma bank and may consider moving its headquarters and stock
listing to the United States.
The company BLAU3.SA , which is currently based in Brazil's
Sao Paulo state and, until now, has been predominantly focused
on business in Latin America, intends to open 10 plasma backs in
the United States in addition to its new site in Florida. Once
the expansion is completed, Blau may consider moving its
headquarters to the United States.
In an interview with Reuters, Blau Chief Financial Officer
Douglas Rodrigues said international investors, unlike those in
Brazil, are used to the business models of pharmaceutical
companies, including those engaged in plasma-based medicine.
Blau is one of several Brazilian companies looking at
relocating to the United States and listing on a U.S. exchange,
a trend fueled by a desire for broader access to investors,
lower corporate taxes, looser regulations for controlling
shareholders and a better capital markets dynamic.
The shift shows how the success of tech startups with U.S.
listings – including digital lender Nubank NU.N - has spurred
interest among Brazilian companies in other sectors, ranging
from retail to cosmetics, in moving their legal domiciles,
mainly to the United States but also to other locations such as
Britain, Ireland and the Netherlands.
SoftBank-backed Banco Inter SA BIDI3.SA , web services
provider Locaweb LWSA3.SA , retailer Lojas Americanas
LAME3.SA and cosmetics maker Natura & Co NTCO3.SA are among
the companies that have announced such moves.
Brazil's JBS SA JBSS3.SA , the world's largest meat
processor, has also said it will pursue next year a U.S. listing
of its international operations.
On Tuesday, Brazilian planemaker Embraer SA EMBR3.SA
unveiled a deal https://www.reuters.com/markets/europe/embraer-flying-taxi-unit-eve-valued-29-bln-list-nyse-2021-12-21
with special purpose company Zanite to list its electric flying
taxi subsidiary on the New York Stock Exchange (NYSE). Embraer
shares soared on the news. urn:newsml:reuters.com:*:nL1N2T60S0
The outflow of Brazilian companies represents a growing risk
to B3, which is starting to look for ways to stem it, as well as
to locally-based fund managers who may find their investment
universe restricted.
Lawyers, bankers and executives, however, expect the trend
to continue for now, although they point out that it will be
confined largely to companies that have significant businesses
abroad. They do not expect a corporate stampede for the exits.
"Some Brazilian companies want to have access to a larger,
more diversified investor base," said Alessandro Zema, head of
Morgan Stanley's Brazil operations.
They also want to cash in on the generally heftier
valuations overseas.
Shares of Natura & Co, which has announced its intention to
swap its main listing from B3 to the NYSE, trades at a
price-to-earnings multiple of about 29, compared to rival
L'Oreal SA's OREP.PA 41.5.
Banco Inter, which first listed on B3 in 2018, trades at
just over 12 times its book value, around half that of its rival
Nubank, which debuted on the NYSE this month. urn:newsml:reuters.com:*:nL1N2T127A
Companies that list outside Brazil are looking for markets
with more comparable companies as well as higher valuations,
said Jean Marcel Arakawa, a corporate lawyer at Mattos Filho in
Sao Paulo, citing asset managers Patria Investment Ltd PAX.O
and Vinci Partners Investments Ltd VINP.O as examples.
Tech companies often decide to redomicile because venture
capital investors tend to prefer to complete funding rounds
using holding companies abroad. Another reason is to entice
founders or controlling shareholders to remain at the helm by
allowing them to own shares with special, higher voting rights.
For example, the founding partners of 3G Capital, including
tycoon Jorge Paulo Lemann, will remain powerful players at
Americanas SA AMER3.SA after the retailer's merger with Lojas
Americanas and U.S. listing. Banco Inter's controlling
shareholders, the Menin family, will be in a similar position at
the digital bank.
NEW RULES
Until recently, Brazilian companies could not locally list
the receipts of their foreign-listed shares through Brazilian
Depositary Receipts (BDRs). Some decided to drop off the local
exchange, causing B3 to lose initial public offerings and
trading fees to the NYSE and Nasdaq stock exchange.
Brazil's securities industry watchdog CVM changed that
listing rule, prompting companies such as Nubank and investment
broker XP Inc to list their BDRs on B3. Those BDRs saw huge
trading volumes when they debuted.
"We try to accommodate companies' demands as they change,"
said Flavia Mouta Fernandes, B3's regulation director.
Brazil has also tried to loosen regulations governing
controlling shareholders' ownership of shares with super-voting
rights, although Fabiano Milane, a corporate lawyer at Stocche
Forbes in Sao Paulo, said local regulations still are not
equivalent to those in other countries.
"Companies already listed cannot use super-voting, and the
extraordinary voting rights are temporary," Milane said.
Frustration over the perceived lack of predictability in
Brazil's legal system is another reason that big companies
choose to redomicile, says Luis Semeghini Souza, a lawyer and
founding partner at Souza, Mello e Torres in Sao Paulo.
Some bankers, however, are skeptical that the current
corporate migration will become a long-term trend.
"I think the universe of companies that could move is maybe
5% of companies in B3, mainly the ones that have or intend to
have significant business abroad," said Roderick Greenlees,
global head of investment banking at Itau BBA.
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TABLE-Valuations of Brazilian companies listed or looking to
list in U.S. urn:newsml:reuters.com:*:nL1N2T127A
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(Reporting by Tatiana Bautzer and Carolina Mandl
Editing by Paul Simao)
((tatiana.bautzer@tr.com; Tel: +55-11-5644-7756; Mob:
+55-119-4210-4173; Reuters Messaging:
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