Louis Dreyfus sets unusual terms for Brazil unit IPO

Biosev will sell as many as 46.67 million common shares and the French parent company will offer put options allowing investors to return the shares in July 2014 for the offering price plus interest.

Additional and supplementary lots equivalent to 7 million shares and 9.33 million shares, respectively, might be part of the offering.

The structure, through which Louis Dreyfus and Biosev will try to lure potential investors with a guarantee to return IPO proceeds if the IPO fails to yield returns, has never been seen in Brazil. None of the 242 share offerings that Thomson Reuters has on record since 2004 have been structured in such a manner.

The company hired Brazilian investment bank BTG Pactual Group to manage the IPO, along with the investment banking units of JPMorgan Chase & Co, Banco Bradesco SA , Banco do Brasil SA and Itau Unibanco Holding SA.

This is the second time Louis Dreyfus and Biosev have taken a stab at an IPO. São Paulo-based Biosev originally announced plans for a share offering last June but suspended those plans in August, citing a lack of demand from investors.

The structure of the IPO signals that even global commodities groups with outstanding track records, such as 161-year-old Louis Dreyfus, are not exempt from investor skepticism over the sale of new equity in Brazil. The benchmark Bovespa stock index is down almost 10 percent this year.

Louis Dreyfus and Biosev added BTG Pactual, last year’s top equity underwriter in Brazil, for the renewed IPO attempt and excluded Banco Votorantim and Banco Santander . Calls to both banks for comment were not immediately answered.

The company and bankers are suggesting a price tag for the shares of 15 reais, and the cost of the option between 0.01 reais and 2 reais. Investors who decide to exercise the option on July 21, 2014, would be repaid a proposed 16.57 reais; the price could vary depending on the result of the IPO, Biosev said.

The company expects to price the IPO on April 15, with both the shares and the options scheduled to begin trading on the Bovespa stock exchange on April 19. Biosev will trade under the symbol “BSEV3.”

Biosev is among the largest Brazilian biomass renewable energy producers and one of the world’s top sugarcane processors, according to the company’s website.

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