Concerns about Brazil’s fiscal health and high interest rates have helped dash hopes that as many as 20 of its companies could go public this year, ending a two-year drought in the country’s once-booming IPO market.
Kallas and other firms that have postponed plans to go public blame Brazil’s persistent fiscal concerns, the country’s high interest rates, which have tended to push investors from equities into fixed income, and fears of a U.S. recession. Hopes that a new round of IPOs might be in the offing grew last year and early in 2024 in step with a loosening of monetary policy, only to be dashed in recent months as the Brazilian central bank paused its interest rate cuts amid rising concerns about Brazil’s fiscal health as well as a possible resurgence of inflation.
Marcelo Mello, the CEO at SulAmerica Investimentos, told Reuters the asset management firm was initially expecting Brazil to emerge from the IPO drought starting in the second quarter of 2024, with about 20 primary share offers this year. The firm now predicts none of those deals are likely to happen until 2025.