Louis Dreyfus Commodities, the Brazilian unit of global financial and commodities firm Louis Dreyfus Corp, plans to spin off its Brazil sugar and ethanol division in an initial share offering, according to terms of the transaction unveiled on Friday.
The Biosev unit is the second largest sugar cane crushing firm in the world, according to the company’s website. The IPO could raise up to 1.14 billion reais ($548 million).
Sao Paulo-based Biosev will sell as many as 55,636,363 common shares at a suggested price of between 16.50 reais and 20.50 reais a piece, the company said in a prospectus published in newspaper Valor Economico.
Closely held, 160-year-old Louis Dreyfus partly follows Glencore International Plc , which went public last year as the rising price of commodities and the need to fund expansion and investments strained its balance sheet.
European banks, major sources of funding for the global commodities trade, have been tightening credit for export financing and Brazil’s government has been curbing medium-term foreign loans to fight a “global currency war.”
This has made issuing shares in Brazil a more attractive alternative for raising capital.
Pricing for the Biosev offering is scheduled to take place on July 18, while trading on Brazil’s Bovespa exchange is expected to begin on July 20.
IPOs in Brazil are currently at a standstill, with investors increasingly averse to buying stock in companies that are not widely known, in pre-operational phases, or in need of funding.
Instead, more investors are buying follow-on offerings because risk is easier to assess than in IPOs.
The company hired Banco Santander, Banco Votorantim , BB Investmentos, ItauBBA, JPMorgan Chase & Co , and Bradesco BBI to manage the transaction.