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Banco Pan said to be eyeing 2B reais follow-on offering; Caixa to lower stake

Brazilian midsize lender Banco Pan SA has begun preparations for a September follow-on public offer of shares worth around 2 billion reais, Valor Econômico reported.

Unnamed sources told the newspaper that the share sale likely will be divided into a primary issue to raise resources for the institution and a secondary issue that will allow a partial exit by state-owned Caixa Econômica Federal, which owns a 41.7% stake in Banco Pan.

Banco Pan currently floats 16.6% of its outstanding shares on the market. However, it is listed under level 1 of stock exchange B3 SA's corporate governance standards, which requires a 25% minimum free float. The offering would be aimed at filling the gap, before a September deadline set by the stock exchange.

Caixa, which has been selling its stakes in various businesses in line with government efforts to downsize public banks, reportedly is fully set on off-loading its Banco Pan stake. However, it is reportedly unwilling to do so in a single transaction, as it is considered to be too large to provide a relevant gain. According to the newspaper's sources, Caixa plans to sell only preference shares at this time.

Meanwhile, Banco BTG Pactual SA, which also owns a 41.7% stake in Banco Pan, is not planning to sell, as it considers the company a part of its digital strategy.

BTG Pactual and Caixa will coordinate the offering, according to the report, with Morgan Stanley and Santander Brasil as structuring agents.

The value of Banco Pan's preference has risen by some 500% in 2019 amid reports that it plans to broaden its digital business to new client bases, Valor Econômico noted.

As of Aug. 13, US$1 was equivalent to 3.97 Brazilian reais.