Sao Martinho Raises 368.4 Million Reais in Brazil IPO
Sao Martinho SA, Brazil's second- biggest sugar and ethanol maker, and shareholders raised 368.4 million reais ($175.6 million) in an initial public offering.
The company sold 10.2 million new voting shares and shareholders sold 8.2 million existing voting shares at 20 reais each, according to a statement today in Valor Economico. Pradopolis, Brazil-based Sao Martinho originally planned to sell the shares at 17.50 reais to 21.50 reais each.
Sao Martinho is only the second Brazilian sugar and ethanol maker to sell shares to the public. Brazil, the world's biggest exporter and per capita consumer of ethanol, is luring more investments into cane-processing mills on expectations domestic and U.S. demand for alternative fuels will rise.
Shares of Cosan SA Industria e Comercio, the world's biggest cane processor and the first to sell shares in Brazil, have slumped 28 percent since early May as sugar prices fell.
More than three-quarters of new cars sold in Brazil have so-called flex-fuel engines that can run on ethanol, gasoline or any blend of the two.
In the U.S., the main buyer of Brazilian ethanol exports, President George W. Bush's push to cut dependence on petroleum has helped boost shipments from the South American country. Brazilian ethanol exports jumped 31 percent to 3.42 billion liters (902 million gallons) in 2006.
Sao Martinho's mill in Pradopolis has the capacity to process 7 million metric tons of cane a year into 500,000 tons of sugar and 300 million liters of ethanol. Its mill in Iracemopolis, Brazil, processes about 2.6 million tons of cane.
Sao Martinho shares will start trading Feb. 12 on the so- called New Market, a section of the Sao Paulo stock exchange with stricter disclosure rules.
Sugar traded on the New York Board of Trade has dropped 45 percent over the past 12 months, the worst performance among commodity futures. The contract for March delivery rose 0.16 cent, or 1.6 percent, yesterday to 10.28 cents per pound.
(Published by Bloomberg, February 9, 2007)