(Recasts to add pricing details, background throughout)
By Guillermo Parra-Bernal
SAO PAULO, April 10 Azul SA and several
shareholders raised 2.021 billion reais ($645 million) in a
dual initial public offering in São Paulo and New York on
Monday, as soaring investor demand led Brazil's No. 3 airline to
boost the size of the deal by almost one-fifth.
São Paulo-based Azul priced the equivalent of 72 million
preferred shares at 21 reais each, the midpoint of the suggested
price range. An additional 13 million shares were sold in the
IPO as investors bid over five times the amount of Azul stock on
offer, three people familiar with the deal said.
Reuters anticipated the 21 real-a-share pricing earlier in
the day. The stock starts trading on Tuesday under the symbols
"AZUL4" in São Paulo and "AZUL" in New York.
Seventy percent of the IPO was placed in New York, with
Brazil-based investors keeping the rest, said one of the people,
who asked for anonymity. The offer values Azul, which JetBlue
Airways Corp founder David Neeleman started almost a
decade ago, at a 4 percent premium to larger Brazilian rival Gol
Línhas Aéreas Inteligentes SA, the person said.
The IPO's success suggests that an April 6 decision by
Brazil's securities watchdog to suspend the transaction hours
ahead of pricing did little to abate interest in the issue. The
watchdog known as CVM said Azul had given some investors
information that was not included in the transaction's official
The impasse posed a temporary setback to Azul, which had to
call off plans to go public on three previous occasions because
of challenging market conditions. The company got clearance from
regulators to pursue the IPO on Friday, after pledging to
include estimates of projected gains in Azul's investment in TAP
Transportes Aéreos Portugueses SA into the official prospectus.
Azul's American depositary shares priced at $20.12, two of
the people said.
The IPO also underscores the growing allure of Brazilian
airlines among foreign investors as the government eases foreign
ownership of carriers and the economy begins to show signs of
emerging from a deep recession.
Shares could rise up to 30 percent due to its Azul's client
loyalty plan and stake in TAP, Eleven Financial
Research analysts led by Daniela Bretthauer said in a client
"Azul has these two 'hidden assets' that could unlock
significant value and funds for the company," Bretthauer said.
After failed attempts to list in 2013, 2014 and 2015, Azul
raised fresh capital through private stake sales in 2015 to
United Continental Holdings Inc., which snapped 5
percent of the company for $100 million, and China's HNA Group
Co Ltd, which bought a 23.7 percent stake for $450 million.
The investment banking units of Citigroup Inc,
Deutsche Bank AG and Itaú Unibanco Holding SA
are acting as the offering's underwriters.
Other banks in the transaction included Banco do Brasil
Securities LLC, Banco Bradesco BBI SA, Santander Investment
Securities, JPMorgan Chase & Co, Raymond James Securities and
Banco Safra SA.
Proceeds from the IPO should bolster Azul's balance sheet as
it gets new jets and adds foreign routes from Brazil, to take on
rivals Gol and LATAM Airlines Group's TAM brand.
($1 = 3.1325 reais)
(Additional reporting by Aluísio Alves in São Paulo; editing by
Meredith Mazzilli and Cynthia Osterman)