Carrefour aims to price Brazil unit IPO by late April

France's Carrefour SA aims to price the initial public offering of its fast-growing Brazilian unit as early as the second quarter, two people with direct knowledge of the plan said on Monday, a sign demand for new equity offerings in Latin America's No. 1 economy is gaining traction rapidly.

According to the first person, Carrefour expects the IPO to take place in a fresh round of stock offerings slated for late April. Carrefour is confident investors may value the unit at a 25 percent premium to larger peer GPA SA's 14.5 billion-real ($4.6 billion) market capitalization, the same person said.

The people said Carrefour hired the investment-banking units of JPMorgan Chase & Co, Bank of America Corp, Itaú Unibanco Holding SA and Goldman Sachs Group Inc to underwrite the offering. Newspaper Valor Econômico first reported the bank line-up earlier in the day.

Carrefour declined to comment, as did the banks.

The IPO could help Carrefour gain additional financial muscle to take on GPA, whose food division has recovered amid a steep decline in appliances sales because of Brazil's steepest recession on record. Industry group Abras ranks GPA, controlled by Carrefour's French arch-rival Casino Guichard Perrachon & Cie, as Brazil's No. 1 diversified retailer.

Brazil's busiest pipeline of bond and equity offerings in at least six years is being fueled by growing investor confidence in the country's ability to emerge from a harsh recession and shrug off global market turmoil.

Market Conditions

Over the past couple of weeks, Brazilian companies filed about 7 billion reais in equity offerings, two of them IPOs, to be held before mid-February. The current window will temporarily stop around then due to a requirement that companies present investors updated full-year financial data, bankers and lawyers said.

Investment bankers expect it to resume rapidly around late March or early April and stretch for longer should market conditions prove favorable.

The transaction seals the first phase of an association between Carrefour and Brazilian retail tycoon Abilio Diniz that started in 2014 and involved a thorough revision of the unit's business model.

Management at Boulogne Billancourt, France-based Carrefour has repeatedly said listing the unit in the São Paulo Stock Exchange is needed to finance expansion.

Diniz, whose family founded GPA, is now Carrefour's third largest shareholder and has a board seat in the French retailer. Diniz and his family bought a 10 percent stake in Carrefour's Brazilian unit through his investment vehicle Peninsula Participações SA in December 2015.

Shares of Carrefour fell 1.2 percent to 22.855 euros in late afternoon trading in Paris. They are down 8.5 percent in the past 12 months.