Brazil’s stock exchange, B3, is experiencing a wave of delistings, driven by factors such as low share prices, high costs, and a challenging business environment. As a result, the number of listed companies on B3 has dropped to 358, matching the levels seen in 2021, down from 371 a year ago and significantly lower than the peak of 398 at the beginning of 2022, following a surge in initial public offerings.
Major players like retailer Carrefour and the merger between Marfrig and BRF have exited the exchange, contributing to the shrinking listed universe. More delistings are anticipated, with companies like airline Gol and BTG Pactual planning to delist as part of their corporate strategies to simplify structures and create synergies.
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Additional potential delistings loom on the horizon, with companies like Votorantim and Rede D’Or engaged in talks that could lead to their exit from the exchange. The market also expects further consolidation, such as Spain’s Iberdrola potentially making a buyout offer for Neoenergia.
The current trend of delistings underscores the challenges facing Brazil’s equity market, which has not seen a single IPO in four years. Market experts suggest that without a clear timeline for a revival in listings, further contraction in the listed universe could occur.
Delistings in Brazil are often triggered by changes in ownership following mergers or acquisitions. Motivations behind delistings vary, with some companies opting to downgrade their listing category or go private to reduce costs amidst depressed valuations and lower investor demand.
Regulatory changes aimed at streamlining the delisting process have been introduced, offering alternatives to traditional valuation reports for pricing public tender offers. This regulatory shift, combined with a broader macroeconomic landscape, is expected to drive a continued trend of delistings in the near future.
While the prospect of new listings on B3 remains uncertain, some experts believe that Brazilian companies may initially seek IPOs in the U.S. before considering local listings. Companies like BTG and Fleury have made strategic moves that could impact their listing status, with BTG announcing a share-swap deal and Fleury in negotiations for an acquisition.
As the dynamics of the Brazilian equity market continue to evolve, the landscape of listed companies on B3 is undergoing significant changes, reflecting the complex interplay of market conditions, regulatory shifts, and corporate strategies.
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