Feb 8, 2011
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Brazil's Sonae Sierra raises $288 mln in IPO

Feb 8, 2011

Feb 1 - Shopping mall operator Sonae Sierra Brasil raised 478.3 million reais (US$288 million) in an initial public offering on Tuesday, the second Brazilian company in two days to go public as a busy IPO period gets under way.

Penha Shopping Sao Paulo, one of the many malls owned by Sonae Sierra

The company sold 23.9 million new voting shares SSBR3.SA in a primary offering at a price of 20 reais each, below a proposed range of 21.5 to 26.5 reais.

Sonae Sierra had filed to sell 21.7 million new voting shares, but underwriters had the option to sell an additional 7.6 million shares to meet demand.

The shares are due to begin trading on the Sao Paulo stock exchange on Feb. 3.
Like shoe retailer Arezzo, which priced an IPO at the top of estimates on Monday, Sonae Sierra Brasil is looking to capitalize on an economic boom that has pushed unemployment to record lows and lifted salaries around the country.

With more money in their wallets and rising bank credit, the bulging Brazilian middle class has gone on a spending spree, buying more clothes, appliances and consumer goods.

Arezzo and Sonae Sierra Brasil are tapping the market as investors' appetite for riskier emerging market securities gains steam, after a mixed year in 2010 in Brazil. The country should have one to two IPOs a week on average through April, the chief executive of exchange operator BM&FBovespa said on Monday.

Another 14 companies have filed to sell stock in Brazil in 2011, including seven through IPOs. Auto parts maker Autometal AUTM3.SA is also going public this week, pricing its offering on Thursday.

Sonae Sierra is controlled by Portuguese conglomerate Sonae SGPS, U.S.-based Developers Diversified Realty Corp and Brazilian group Enplanta Shopping Participacoes Ltda.

The company plans to use 53.5 percent of the IPO proceeds on new mall developments.

Sonae Sierra Brasil said 12.4 percent would be used on expansion and revamping existing malls, and 18.5 percent would be used to buy land for developments and for stakes in malls.

It also plans to allocate 15.7 percent of the IPO funds to pay a 31.6 million euro ($42 million) loan with its parent holding company Sierra Brazil 1 BV, which is owned by DDR, Portugal's Sonae and Enplanta.

Credit Suisse led the offering, with Itau BBA, the wholesale and investment banking unit of Itau Unibanco and JPMorgan helping to underwrite the sale.

The banks stood to earn about 24 million reais in fees from the Sonae Sierra stock sale, or 5 percent of the total offering, according to the prospectus.

By Elzio Barreto

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