Votorantim suspends US$4 billion+ IPO

Votorantim is reported to have cancelled a US$4 billion+ initial public offering (IPO) of its cement business, Votorantim Cimentos, after concerns about pricing, new regulations and weakening market conditions.

The spin-off of the unit – the largest cement producer in Brazil – is said to have been suspended after bids came in below the planned BRL 16.00 to BRL 19.00 (US$ 7.80 to US$ 9.26) per share price range.

Votorantim, which was seeking listings on both the Bolsa de Valores de São Paulo (BM&Fbovespa) in São Paulo, Brazil and the New York Stock Exchange (NYSE) in the US – is reported to have refused to lower the price.

Other factors such as a lack of transparency in the structure of the deal and a general stock-market deterioration amid a slow-down in Brazil’s economic growth are said to have contributed to the withdrawal of the IPO.

In addition, a new regulation has been proposed by Brazilian president Dilma Rousseff that would raise the cost of extracting materials from the ground. The new mining code would see royalties on producers increased from 2% to 4% of total revenues – an increase that would impact Votorantim’s business.

Sao Paulo-based Votorantim, which is controlled by one of Brazil's richest families – the Ermirio de Moraes family – was unavailable for comment.

Last year, Votorantim Cimentos had revenues of BRL 9.48 billion (US$ 4.71 billion) and net profits of BRL 1.64 billion (US$ 815 million).

The company has a total of 33 cement plants worldwide, almost half of which are in its home market of Brazil, along with 23 grinding mills, 331 ready mixed concrete plants, 84 quarries, two clinker plants, two lime units and 13 mortar plants. Its total installed capacity is some 58 million tonnes of cement per year.