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Parking operator is Brazil’s first ‘online’ IPO

. May 15, 2020
Parking operator is Brazil's first 'online' IPO Photo: Dencg

Instead of the traditional confetti and bell-ringing on the trading floor, a Zoom video-conference broadcasted on YouTube welcomed parking operator Allpark to São Paulo’s stock exchange (B3) on May 15. Besides the changes to the traditional initial public offering (IPO) ceremony, the owner of the Estapar brand of parking lots is also innovating in the entire process of going public during a pandemic.

As explained by André Iasi, Estapar’s chief executive officer, the entire book-building process — the pre-IPO hype designed to raise investors’ appetite for shares — was carried out entirely online, due to the coronavirus-imposed quarantine.

“We had the first 100-percent digital roadshow in history,” rejoiced Mr. Iasi. Despite the tough circumstances, he celebrated the fact that his company managed to entice enough investors. Allpark priced its stocks at the <a href="https://www.infomoney.com.br/mercados/dona-da-estapar-precifica-ipo-a-r-1050-capta-r-345-milhoes-e-fara-estreia-na-bolsa-durante-a-pandemia/">bottom end of the price range</a>, at BRL 10.50 per share, raising BRL 345 million with the initial offer coordinated by investment bank BTG Pactual.</p> <p>In fact, BTG Pactual’s founder, banker André Esteves, was among those responsible for the IPO’s success. As the <a href="https://www.moneytimes.com.br/andre-esteves-compra-silenciosamente-parte-dos-socios-na-estapar/">controller of the Maranello fund</a> — Allpark’s main investor with roughly <a href="https://static.bancointer.com.br/site/investimentos/ofertas-publicas/pdfs/d4202459b23a438ba551f8bf36b5b56c_allparkprospectopreliminar.pdf?_ga=2.74692181.675748931.1589563717-130562173.1589563717">48 percent of shares before the IPO</a> — he guaranteed the fund would resort to subscription rights and purchase the shares offered even if there was no demand. According to finance website <em>Seu Dinheiro</em>, Mr. Esteves <a href="https://www.seudinheiro.com/2020/empresas/andre-esteves-compra-40-das-acoes-da-estapar-no-ipo/">purchased 40 percent of all available stocks</a>.</p> <p>This money will allow Estapar to pay São Paulo’s municipal government for the right to operate paid-for parking spaces in the city, known as <em>“Zona Azul.”</em> The addition of 43,000 of these spaces — that may be extended by another 8,000 — accounts for 11 percent of the parking lots under Estapar’s control. The remaining funds to meet the BRL 600-million price tag will reportedly be <a href="https://exame.abril.com.br/exame-in/primeiro-ipo-da-pandemia-estapar-sai-no-piso-do-preco-esperado/">obtained by way of loans</a>.</p> <p>Allpark (ALPK3) had a rough start, with its price dropping 20 percent in early trading to a minimum level of BRL 8.40.</p> <h2>IPOs and the pandemic</h2> <p>During the ceremony, the São Paulo stock exchange CEO Gil Finkelsztain stressed the importance of capital markets to fund companies amid the crisis. &#8220;They remain an important source of resources, allowing issuers to keep following business growth strategies,&#8221; he said, adding that he was positively surprised by the IPO, as he didn&#8217;t believe the country would have stock debuts before the year&#8217;s final quarter.</p> <p>Allparks’ IPO was the fifth such operation in 2020, already matching the total seen in 2019. But while the Brazilian Securities Commission (CVM) <a href="http://sistemas.cvm.gov.br/asp/cvmwww/registro/ofertas2/secnd2.asp?grp_emis=1">has 19 IPO requests</a> on its website, all of them have been interrupted. In fact, only four are still expected to happen in 2020.</p> <p>Despite the <a href="https://brazilian.report/business/2020/04/24/political-deadlock-investors-brazilian-markets-could-get-even-worse/">volatility that has overcome the markets</a>, melting asset prices, and creating very rough conditions for IPOs, B3 <a href="https://s3.amazonaws.com/mz-filemanager/5fd7b7d8-54a1-472d-8426-eb896ad8a3c4/a0baa833-0ae6-4eef-9fca-f5d2d17266eb_1T20-%20Apresentacao%20de%20Resultados_PORT.pdf">announced a recurring profit</a> of BRL 1.1 billion in Q1 2020, a 57-percent bump from the previous quarter.

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Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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