High interest rates in the United States postpone Brazilian IPOs in New York

The still hazy outlook on the direction of US interest rates should keep Brazilian issuers away from Wall Street. Companies that plan to list on the New York stock exchanges, such as the Fogo de Chão steakhouse chain, have postponed their plans to wait for a less hostile environment, which emptied the main stage of initial stock offerings (IPO, in its acronym in English) of the world.

Until the beginning of December, only 167 IPOs were carried out in the USA in 2022, a drop of more than 80% compared to 2021, points out the North American consultancy Dealogic. The financial volume, in turn, collapsed 93%, to around US$ 21.76 billion, on the same basis of comparison. Thus, the US lost leadership in IPOs to China.

For Brazilian issuers, the last IPO was that of Nubank, in December 2021. This year, the only offer made on Wall Street was led by Pátria Investimentos, which raised US$ 230 million through a special purpose company (Spac, in English acronym). In 2021, there were nine Brazilian listings in the US, according to Dealogic.

Behind the numbers is doubt about the direction of basic interest rates in the US. Rates went from zero to a range of 4.25% to 4.5% a year, in the fastest monetary tightening in decades. In its last meeting of the year, the Federal Reserve (Fed, US BC) moderated the increase in interest rates in the US to 50 basis points, but signaled that rates should still rise and be maintained at high levels. “I wouldn’t see us considering rate cuts until the board is confident that inflation is falling to 2% on a sustained basis,” Fed Chair Jerome Powell said after the institution’s latest decision.

Given this scenario, the list of dropouts of possible IPOs by Brazilian issuers grew throughout the year. In addition to Fogo de Chão, the Elo card brand, the lending fintech Creditas, the content platform Hotmart and the payments company Ebanx postponed the dream of ringing Wall Street’s bell.

The president of Goldman Sachs, David Solomon, said that the environment is one of “uncertainties”, in a recent conference promoted by the bank. The banker stated that the recovery in the sector has not yet taken place. In his view, the market will have to get used to new asset valuation values.

In this scenario, an alternative for Brazilian issuers was to list without raising funds, as did companies such as Eve, Embraer’s electric flying car startup, which merged with an already listed “blank check” company. Banco Inter just migrated from B3 to Wall Street. Even without bringing new money, the strategy has its advantages: “It gives more visibility to the stock and allows large investors to position themselves in the name”, said the president of Inter bank, João Vitor Menin, after listing on the New York Stock Exchange (NYSE ), in June of this year.


The information is from the newspaper The State of S. Paulo.

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