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Banco BMG confirms IPO suspension after seeing weak demand

Confirming reports, Brazil-based Banco BMG SA on Dec. 17 said that it had suspended its initial public offering for a period of up to 60 days after seeing weak demand.

In a regulatory filing, the institution said that it took the decision after "considering current market conditions." It was earlier reported that weaker than expected foreign demand had caused the bank to postpone the operation. The company had been expected to price the IPO on Dec. 17 and begin trading later in the week.

The institution, which is based in the Brazilian state of Minas Gerais, previously set an indicative price range between 11 reais and 14 reais per share, which, at a midpoint of 12.5 reais, would have brought in about 2.03 billion reais.

According to a report by O Estado do São Paulo, BMG had accumulated just 1.30 billion reais worth of investor demand, with most offers at the 11 reais end of the indicative range. The institution reportedly refused to lower the offering beneath its indicative range in order to attract more investors.

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

Banco BMG 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.