Companies tap stock market to invest
Despite the uncertain economic outlook and the pandemic, a select group of Brazilian companies sees opportunities ahead and seeks money to grow. Of the R$10.6 billion raised with primary stock offerings in January and February, 86.3% will be used to buy assets, finance operational activities and acquire shareholdings, according to a survey by Cemec, a center of the Institute of Economic Research Foundation (Fipe) that studies the capital market.
The behavior today is different from what was seen in the 2016 crisis, when raising funds for working capital and restructuring liabilities were the main objectives of the few companies that ventured on the stock exchange.
Only 13.7% of the amount raised with stock offerings in the first two months of the year will be used to reduce liabilities, according to prospectuses of the operations. A portion of 27.6% will go towards the purchase of equity interests and 58.7% will go towards the acquisition of assets and operating activities.
In contrast, working capital (59.2%) and debt reduction (21.1%) were the main destinations for the money raised in the primary stock offerings in 2016, when President Dilma Rousseff was impeached, with financial repercussions on companies in the following year.
Now, there are also more offerings. Only in January and February, 13 operations were carried out - in comparison with only two in the entire year of 2014, five in 2015 and six in 2016 - which makes the data more representative.
Cheaper and more abundant money in the world contributes for the attractiveness of the stock market. "At the end of last year, the cost of equity for Brazilian companies was less than 6% per year in real terms. It is the lowest value in recent years," says Carlos Antonio Rocca, Cemec's coordinator. "The value of companies increases when interest rates falls, and stimulates stock offerings."There is still a perception that the Brazilian economy offers good perspectives ahead, after the pandemic storm. "The investment cycle is a years-long project. Companies look at the long-term," says Roderick Greenlees, head of global investment at Itaú BBA.
That is why the executive sees greater diversity in the sectors going to the stock exchange this year, with the main objectives being capital expenditures (Capex) and advancing digital processes. "Last year, we saw part of the funds go to refinancing, cash reinforcement, mergers and acquisitions and digital transformation," says Mr. Greenlees. "This...
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