The BM&F, the São Paulo futures exchange, will float on Friday on the São Paulo Stock Exchange (Bovespa), in what is expected to be another sign of huge investor interest in Brazilian assets.
It follows the Bovespa’s own record-breaking IPO last month.
Shares priced on Wednesday night at R$20 per share, at the top of the target range. At that price, the company’s market capitalisation would be about R$17.8bn ($10bn). CME Group, the world’s largest futures exchange, currently has a market cap of $33.2bn.
The BM&F had planned to offer its shares in a range of R$14.50 to R$16.50 but this week increased its target range to R$18 to R$20 after greater-than-expected interest from investors during book building.
The BM&F’s IPO follows the extraordinary IPO of Bovespa Holding, owner of the São Paulo Stock Exchange, whose shares gained more than 52 per cent on their first day of trading on October 26.
If a supplementary offer is successful, the BM&F will sell 33.2 per cent of its shares, for a total of R$5.9bn. That would represent a substantial premium on two recent deals between the BM&F and strategic overseas investors.
In September, the BM&F’s shareholders sold 10 per cent of its shares to General Atlantic, a US private equity firm that has taken stakes in several exchanges around the world, for R$1bn. General Atlantic paid R$900m up front with the remaining R$100m conditional on the BM&F’s IPO taking place before year end and on its subsequent market capitalisation exceeding R$12bn.
Then last month the exchange swapped 10 per cent of its shares for 2 per cent of shares in the CME in a deal that valued the BM&F at R$13bn.
Yet if the Bovespa floatation is any guide those values will be exceeded by a wide margin. The Bovespa offering was oversubscribed by about ten times and left the exchange with a market capitalisation of about R$24bn.
Like the Bovespa, the BM&F has no competitors to speak of. Trading on the exchange can be expected to expand quickly if, as analysts expect, Brazil is given an investment grade rating next year.
