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Petz shares priced in middle of range in IPO, could raise up to R$3bn

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Vincent

Pet shop chain Petz priced its shares at R$13.75 for its IPO, in the middle of the initial price range of R$12.25 to R$15.25. The base offering will be of R$2.24 billion, with the largest tranche being a secondary offering of shares held by private-equity manager Warburg Pincus. The sale could raise a total of R$3.03 billion if an additional lot of shares is sold, but that was not confirmed by the company.

There was pressure from investors to reduce the price but two sources said the high demand helped to underpin the price in the middle of the range. "The price was a bit stretched, and is entering the market with a hefty price. But this is a market which grows a lot and lacks large competitors. With the exception of Petz, the only large chain is Cobasi. The remainder are local stores, so the company pitched to the market this consolidation advantage," says an asset manager who bought shares of the company.

Investors have been pressuring to lower the prices suggested by companies, which shows that robust demand indeed propped up the price within the expected range, another source adds. This source said demand at the establishd price was 3.5 times the available volume. Itaú BBA, Santander, Bank of America, J.P. Morgan and BTG Pactual are underwriting the...

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