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Brazilian companies hear the siren call of US stock exchanges

SAO PAULO, Dec.22 (Reuters) – Pharmaceutical company Blau Farmaceutica SA, which listed its shares on the Brazilian B3 stock exchange (B3SA3.SA) in April, opened its first U.S. plasma bank and may consider relocating its headquarters social and its stock market listing in the United States.

The company (BLAU3.SA), which is currently headquartered in the state of Sao Paulo in Brazil and, until now, was mainly focused on activities in Latin America, intends to open 10 plasma backs to the United States in addition to its new location in Florida. . Once the expansion is complete, Blau may consider moving its headquarters to the United States.

In an interview with Reuters, Blau CFO Douglas Rodrigues said international investors, unlike those in Brazil, are used to the business models of pharmaceutical companies, including those engaged in plasma-based medicine.

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Blau is one of several Brazilian companies considering relocating to the United States and listing on a U.S. stock exchange, a trend fueled by the desire for greater access to investors, lower taxes. on corporations, more flexible regulation for controlling shareholders and better dynamics in capital markets.

This change shows how the success of U.S.-listed tech startups – including digital lender Nubank (NU.N) – has spurred Brazilian companies’ interest in other industries, ranging from retail to cosmetics, for moving from their legal domicile, primarily to the United States. but also to other places like Great Britain, Ireland and the Netherlands.

Banco Inter SA (BIDI3.SA), backed by SoftBank, web service provider Locaweb (LWSA3.SA), retailer Lojas Americanas (LAME3.SA) and cosmetics manufacturer Natura & Co (NTCO3.SA) are among the companies that have announced such measures. .

Brazilian company JBS SA (JBSS3.SA), the world’s largest meat processor, also announced that it will continue with a U.S. listing of its international operations next year.

On Tuesday, the Brazilian aircraft manufacturer Embraer SA (EMBR3.SA) unveiled an agreement with the ad hoc company Zanite to list its subsidiary of electric flying taxis on the New York Stock Exchange (NYSE). Embraer’s shares have skyrocketed on the news. Read more

The exit of Brazilian companies represents a growing risk for B3, which begins to look for ways to contain it, as well as for local fund managers who may find their investment universe small.

Lawyers, bankers and executives, however, expect the trend to continue for the time being, although they stress that it will be largely limited to companies with significant operations abroad. They don’t expect a corporate scramble for exits.

“Some Brazilian companies want access to a larger and more diverse investor base,” said Alessandro Zema, Morgan Stanley’s operations manager in Brazil.

They also want to take advantage of the generally higher valuations abroad.

Shares of Natura & Co, which has announced plans to trade its main B3 listing on the NYSE, are trading at a price / earnings multiple of around 29, compared to 41.5 for rival L’Oréal SA (OREP .PA).

Banco Inter, which was first listed on B3 in 2018, is trading at just over 12 times its book value, about half that of rival Nubank, which debuted on the NYSE this month- this. Read more

Companies listed outside of Brazil look for markets with more comparable companies as well as higher valuations, said Jean Marcel Arakawa, corporate lawyer at Mattos Filho in Sao Paulo, citing asset managers Patria Investment Ltd (PAX .O) and Vinci Partners Investments Ltd. (VINP.O) as examples.

Tech companies often decide to re-register as venture capitalists tend to prefer to supplement funding rounds using overseas holding companies. Another reason is to encourage founders or controlling shareholders to stay at the helm by allowing them to hold shares with special and higher voting rights.

For example, 3G Capital’s founding partners, including tycoon Jorge Paulo Lemann, will remain powerful players at Americanas SA (AMER3.SA) after the retailer’s merger with Lojas Americanas and listing in the United States. Banco Inter’s controlling shareholders, the Menin family, will occupy a position similar to digital banking.

NEW RULES

Until recently, Brazilian companies could not locally list receipts for their shares listed abroad through Brazilian Certificates of Deposit (BDR). Some have decided to ditch the local exchange, causing B3 to lose the initial public offerings and trading fees to the NYSE and Nasdaq exchanges.

Brazil’s securities industry watchdog CVM has changed this listing rule, prompting companies like Nubank and investment broker XP Inc to list their BDRs on B3. These BDRs recorded huge volumes of transactions when they started out.

“We try to meet the demands of businesses as they change,” said Flavia Mouta Fernandes, director of regulation at B3.

Brazil has also attempted to relax regulations governing the ownership of controlling shareholders of majority voting shares, although Fabiano Milane, corporate lawyer at Stocche Forbes in Sao Paulo, said local regulations are still not not equivalent to those of other countries.

“Companies already listed cannot use super-voting, and extraordinary voting rights are temporary,” said Milane.

Frustration over the perceived lack of predictability in the Brazilian legal system is another reason large companies choose to redomiciate, says Luis Semeghini Souza, lawyer and founding partner of Souza, Mello e Torres in Sao Paulo.

Some bankers, however, are skeptical that the current business migration will become a long-term trend.

“I think the universe of companies that could move represents maybe 5% of the companies in B3, mainly those that have or intend to have significant activities abroad”, said Roderick Greenlees, manager global investment bank at Itau BBA.

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Reporting by Tatiana Bautzer and Carolina Mandl Editing by Paul Simao

Our standards: Thomson Reuters Trust Principles.


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Rodney N.

The author Rodney N.