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Brazil: Prospects brighten for retail equity investment

Local retail investors will become a bigger force in Brazilian equity offerings, according to senior investment bankers, after Banco do Brasil completed a transaction last month that attracted record interest from individuals in a single deal.

More than 40% ($760 million) of the bank’s $1.9 billion offering, which included a greenshoe option, was placed with local retail investors. Bankers reckon that many intend to hold on to their shares. "The retail investors that usually participate in IPOs often go in and try to get a quick turnover on their money. But for this most recent jumbo offering the bank has attracted a more long-term orientated retail audience, such as the father who wants to invest $1,000 for his son in 10 years’ time," says Evandro Pereira, managing director, head of Latin America, equity capital markets at UBS, which co-managed the deal with BB Banco de Investimento and Deutsche Bank.

In the weeks preceding the issue, Banco do Brasil undertook an extensive advertising campaign on prime-time TV featuring famous actresses to further enhance the trusted brand name of the bank. Personnel in each branch have also been trained to execute trades and educate investors about the risks to encourage greater retail participation.

Local institutional investors took a large proportion of the deal too. These local investors, like their retail counterparts, have been pushed into considering equities by falling interest rates, which have made fixed-income returns less attractive.

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