Grupo Big bets on turnaround story to draw investors for IPO
Grupo Big (formerly Walmart Brasil) is moving forward with an IPO in the country by telling investors that it has managed to turn the operation into a profitable business in two years. In its pitch, the company also says any growth plan must include a faster evolution of both cash-and-carry operation and digital model - the latter is still in early stages, unlike rivals GPA and Carrefour.
It's the second food retailer to file for an IPO after Grupo Mateus. GPA's Assaí is expected to list shares by early 2021.
Big's preliminary prospectus released Monday highlights the company's results - a big question mark among rivals until then - and the history of transactions between Big and partner Walmart in the United States, such as royalties and payments to the former controlling shareholder from the acquisition closed in 2018.
The company cites "signs of turnaround" in 2019 and its "successful history of reformulation and conversion of stores," which led the company to be a cash generator. The results show profit just over R$3 billion between January and September, compared with a loss of R$80 million a year earlier. The 2020 positive result was impacted by the recognition of deferred tax assets.
In part because of taxes and contributions, an amount of R$2.4 billion made it to the balance sheet, impacting profit. Without considering this, the operating profit was R$583 million, up 217%.
The R$15.7 billion business, considering net sales, has grown around 5% by September in nominal terms. The industry has grown 3.9% by August in real terms, trade association Abras says. Carrefour and GPA (excluding Colombia) has grown a little over 13% by June - they haven't published third-quarter results yet. Big has 389 stores in Brazil, a little less than half of GPA.
Net cash amounted to R$537 million in September, flat over a year ago. Yet the figure excludes the effects from IFRS 16. Big hasn't informed any debt in the line of loans and financing.
As for projects, the company mentions potential for opening 340 units of Sam's Club and Maxxi Atacado until 2030, being 125 of the former, a buying club, and 215 of the latter, a cash-and-carry business. There is still a plan to set up real estate operations in 23 of the 184 properties owned by the chain.
The company owns brands Big, Big Bompreço, Super Bompreço, Nacional, Mercadorama, TodoDia, Maxxi Atacado, Sam's Club, Posto Big and Posto Big Bompreço.
At least three asset managers said Monday they were still...
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