IRB (IRBR3) prices share offering this Thursday, amid efforts to raise capital and re-frame regulation

IRB (IRBR3) prices share offering this Thursday, amid efforts to raise capital and re-frame regulation
IRB (IRBR3) prices share offering this Thursday, amid efforts to raise capital and re-frame regulation

This Thursday (1) is an important date for the reinsurer IRB Brasil RE (IRBR3). The company is pricing its share offering today, seeking R$1.2 billion to meet regulatory requirements. The offer must have the participation of the two largest shareholders of IRB, Itaú (ITUB4) and Bradesco (BBDC4).

This week, on the eve of the pricing of the offer, the company announced two transactions that should bring its cash to almost R$ 190 million, although far from solving the reinsurer’s lack of capital. In June, the IRB needed R$729 million to cover Susep’s requirements.

Last Tuesday (30), the company announced the negotiation of its headquarters, a historic building in downtown Rio, with Sebrae-RJ, for R$ 85.3 million. Hours later, he announced an agreement that will allow the sale of his stake in Casashopping, a shopping center dedicated to the decoration sector, which will generate an additional R$ 100 million. The IRB holds 20% of the enterprise.

“We see both movements (of asset sales) as positive, but the IRB continues to have a significant lack of capital”, commented Citi analyst Gabriel Gusan, in a report sent to clients.

The deadline for the regularization of capital ends on October 31. If the situation is not rectified, the IRB may be submitted to a special regime of fiscal direction by Susep, which would appoint a fiscal director to supervise it.

Citi also highlighted, in support of other market analyses, that the capital increase should lead to a dilution of shareholders, according to analysts. The sell recommendation was maintained, as well as the target price of BRL 1.60 per share, established two days before the offer was confirmed.

The bank’s analyst also outlined different scenarios looking at the size and price of the offer. A capitalization of BRL 1.2 billion at BRL 1.50 per share would bring the target house price to BRL 1.30 per share. Capitalization at BRL 1 would bring the target price to BRL 1.10. At R$0.80-R$0.90, there could be room for an increase in assets.

Gusan also points out that the rental of shares (with bets on short positions) reached records and was close to its limit. Thus, even though the limit was later raised (from 25% to 30% of the free float), there is more limited room for stocks to fall faster.

In any case, in an operational scenario that is still very affected (and which suffered a strong setback with the drought in the last quarter) and with the constant capital increases, the view of market analysts is still quite skeptical about the company, with recommendations for investors to be cautious in IRBR3.

“One question is whether these amounts of R$ 1.2 billion will really solve the company’s problem, since the operational has not yet shown signs of improvement, the loss ratio remains high by the company’s own standards, with a combined rate above of 100%. The operating result is still deficient and causing losses, even with the more favorable trend of the financial result due to the high Selic”, he highlighted to the InfoMoney Carlos Daltozo, head of equity at Eleven Financial. Eleven currently has the IRB recommendation under review.

BTG Pactual also highlights being cautious with the asset. “It is true that we expected the IRB to be in a more comfortable situation now and we signal that our ability to predict results has so far been very low”, pointed out the institution’s analysis team.

Genial’s team highlighted that it is difficult to know the future of the IRB, which may even open doors for a delisting or change of control. “Amidst a troubled and uncertain environment, we reiterate the recommendation to sell”; the target house price for the assets is R$ 2.10.

Safra reduced the share’s target price after the announcement of the follow-on from R$3.10 to R$2.40, maintaining a neutral recommendation, pointing out that they do not rule out another adjustment in the target price depending on the result of the offer of actions.

(with Estadão Content)

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The article is in Portuguese

Tags: IRB IRBR3 prices share offering Thursday efforts raise capital reframe regulation

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