EXCLUSIVE: Investors See End to IPO Drought in Brazil

Directors at JP Morgan and General Atlantic are optimistic that, with falling inflation next year, and once the elections are behind us, there will be a revival of primary and secondary offerings

Photo: Bloomberg Línea
September 14, 2022 | 04:40 PM

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Bloomberg Línea — No company in Brazil launched an initial public offering (IPO) in the first half of this year, with only tech company Semantix (STIX) debuting on Nasdaq recently through a merger with special-purpose acquisition company (SPAC) Alpha Capital.

But after the drought of IPOs as a result of high interest rates, Pedro Juliano, head of investment banking at JP Morgan in Brazil, sees follow-ons happening again in the United States early next year, and he believes IPOs should also return, driven by offerings in the US market.

“This year was not just a bad year for IPOs in Brazil, but In Europe, the United States, and Asia also there was a very big slowdown. But with inflation further down next year the activity [of IPOs] will positively impact Brazil,” Juliano said during the panel ‘New era for startups and venture capital funds in Latin America’ at the Bloomberg Línea Summit held Wednesday in São Paulo.

Read about the Bloomberg Línea Summit in Portuguese here.


Speaking on the same panel, Rodrigo Catunda, managing director and co-head of Brazil at General Atlantic, also has an optimistic view and sees Brazil as “very well positioned” in the global market.

“Developed markets don’t know how to operate with high inflation,” he said, adding that due to China’s regulatory issues and Russia’s war on Ukraine, capital allocation in emerging markets should be directed to Brazil.

“[The IPO drought] is much more an external issue than an election. From the moment we know who the president [of Brazil] is going to be, I think the window [for IPOs] opens,” Catunda said.


At a time when venture capital investments in Latin America fell by around 19% in the first half of this year compared to the same period last year, according to data from the Association For Private Capital Investment in Latin America (LAVCA), Catunda said General Atlantic has changed its investment mindset by looking more at the public equity market, to the detriment of the private market.

“We invested in companies we like with low multiples, and on the private side, it always takes a little longer to adjust [the valuation]. Crises last from a year and a half to three years. I believe we will have one year of adjustment in the private market, but in a year and a half, two, it will be better. The interest rate cycle will decrease and the market will bounce back,” Catunda said.

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