Gafisa SA canceled its plan to launch an IPO in Brazil for its low-cost home builder unit due to the current unfavorable market environment.

The company requested that the Brazilian Securities and Exchange Commission cancel its application to list Construtora Tenda SA.

Instead, the company agreed to sell up to a 30% stake in the unit to Jaguar Growth Asset Management LLC for 8.13 Brazilian reais, subject to certain conditions. The transaction is expected to value Construtora Tenda's full share capital at 539.0 million reais.

Gafisa will receive 231.7 million reais in cash proceeds from the stake sale.

The company added that it plans to continue the separation of Gafisa and Tenda into two publicly traded, independent entities.

As of Dec. 13, US$1 was equivalent to 3.33 Brazilian reais.