Brazilian companies hear the siren's call of U.S. stock exchanges

Brazilian companies hear the siren's call of U.S. stock exchanges ...

SAO PAULO, 22 Dec. - Pharmaceutical company Blau Farmaceutica SA, which listed its shares on the Brazil's B3 stock exchange in April, opened its first plasma bank of the United States and may move its headquarters and stock listing to the United States.

The company is currently in Sao Paulo, Brazil, and, for now, has a focus on Latin America, which is intended to have 10 plasma backs in America and / or the expansion of its new site in Florida. Once the expansion is finished, Blau may decide to move his headquarters to the US.

In an interview with Reuters, chief financial officer Douglas Rodrigues said that international investors, similar to those in Brazil, are used to pharmaceutical industry model models. That's why they use plasma-based medicine as a business model.

Blau is one of several Brazilian companies looking for relocating to the United States and offering a US exchange, a trend driven by a desire for increased access to investment investment, lower corporate taxes, more controlled shareholders control, and better capital market dynamics.

This shift shows how successful tech startups have been driving interest in American-backed listings - including the digital lender Nubank - and caused interest among Brazilian companies in other sectors, like retail to cosmetics, in moving their legal domiciles, mainly to the United States, but also in other places, such as England, Ireland and the Netherlands.

Neither SoftBank nor Inters SA, nor any online service provider Locaweb nor as a retailer Lojas Americanas or cosmetics maker Natura & Co are among the companies that announced such moves.

A listing of its international operations has also been approved by Brazil's JBS SA, the world's biggest meat processor.

On Tuesday, the Brazilian planemaker Embraer SA and the special purpose company Zanite announced the expansion of its electric flying taxi subsidiary on the New York Stock Exchange. Embraer shares made a huge move.

The outflow of Brazilian companies represent a growing risk to the company B3 - which is now seeing new ways to remove that, but also to local investors who consider themselves restricted to their investment universe.

Although lawyers and banks are expecting for now, a trend is expected to continue, with no doubt that the trend will be confined to companies with significant business abroad.

"Some Brazilian companies want to enter into a larger, more diversified investor base," said Alessandro Zema, director of Morgan Stanley's Brazilian operations.

They also want to get back to cash in on the generally heftier foreign currencies.

A share of Natura & Co announced that it intends to add its main spout of B3 to the NYSE, is traded for about 29 dollars more than L'Orreal SA's 41.5.

Banco Inter, which were first listed on B3 in 2018, trades at half its book value, approximately a half the price of its rival, Nubank.

A group of companies who list outside Brazil will seek to acquire more comparable businesses as well as acquire a higher valuation, said Jean Marcel Arakawa, a corporate lawyer for Mattos Filho in Sao Paulo, in which he cites the asset managers Patria Investment Ltd and Vinci Partners Investments Ltd as examples.

Tech companies often choose to redomicile because venture capital investors prefer to get funding rounds by transferring them abroad. Another reason is the ability to reassure people to keep the helm by allowing them to own the shares with special, accelerated voting rights.

The CEO of 3G Capital, a tycoon Jorge Paulo Lemann, will remain powerful players at Americanas SA after the company merger with Lojas Americas and U.S. listing. One of the major players of Banco Inter, the Menin family, will continue to manage the digital bank.

No NEW RULES!

Until recently, Brazilian companies couldn't list the receipts of their foreign-listed shares locally through Brazilian Depositary Receipts (BDRs). Some decided to drop the local exchange, leaving B3 losing initial public offerings and trading fees to the Nasdaq and Nasdaq stock exchange.

The CVM, which announced that the CVM has changed the listing rules, told companies like Nubank and XP Inc to list their BDRs on B3 compared to their initial selling volumes.

As soon as they change, we try to help the company demand, said Flavia Mouta Fernandes, director of B3 regulations.

Brazil has also tried to let it loose regulations that govern the ownership of companies with a capital prize holder. However, Fabiano Milane, a senate lawyer at Stocche Forbes in Sao Paulo, said there are still no local requirements that are similar to those in other countries.

"Companies already listed cannot use super-voting and that extraordinarily voting rights are temporary", says Milane.

Frustration over the fact that the Brazilian system does not predictably fail, is another reason the big companies decide to redomicile, says Luis Semeghini Souza, a lawyer and founding partner at souza, Mello e Torres, in Sao Paulo.

However, some bankers are skeptical that corporate migration can become a long-term trend.

"I think that a number of companies that could move may be 5% of the companies in B3, mainly those that have or intend to have significant business abroad," said Roderick Greenlees, global manager of investment banking at The Itau BBA.

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