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Report: Brazil's Banco BMG postpones IPO as foreign demand falls short

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Report: Brazil's Banco BMG postpones IPO as foreign demand falls short

Brazil-based Banco BMG SA suspended its initial public offering due to weak demand from foreign investors, Valor Econômico reported based on an anonymous source familiar with the operation.

The institution had previously set an indicative price range between 11.0 reais and 14.0 reais per share, which, at a midpoint of 12.5 reais, would have brought in about 2.03 billion reais.

But offers reportedly came in at the low end of the range and did not amount to the full number of shares offered.

"The Brazilian market bought the idea and confirmed the order to acquire the shares," said the source, who declined to be identified, but added that foreign investors could "not be convinced that the time is now."

According to a report by O Estado de S. Paulo, BMG had accumulated 1.30 billion reais in demands mostly priced at around 11.0 reais per share. The institution reportedly refused to lower the offering beneath the indicative range so as to garner more investors.

BMG reportedly required between 500 million to 700 million reais in additional orders in order to continue with the IPO.

"So close to the end of the year and with high volatility, it's hard to come up with new stories that need to be priced," another anonymous source reportedly told Valor.

Banco BMG has reportedly hired Banco Itau BBA SA, XP Investimentos, JPMorgan Chase and Brasil Plural Securitizadora SA to arrange the offering.

The bank had considered going public in 2007 and 2010, but did not reach the point of hiring coordinators for an offering on either of those occasions.

As of Dec. 14, US$ 1 was equivalent to 3.89 Brazilian reais.