By Rachel Gamarski
(Bloomberg) — The four-year drought for initial public offerings (IPOs) in Brazil may be nearing an end, according to Citigroup Inc., which also predicts a recovery in secondary sales in 2026.
Capital has started to flow back to emerging markets like Brazil and Mexico, which will help boost equity capital markets next year, according to Nicolas Roca, head of investment banking for Latin America at Citi. Brazil has not seen an IPO since fertilizer producer Vittia Fertilizandos e Biológicas SA () went public in September 2021.
“You have seen valuations recover a bit in the equity capital markets, although there is still a lot of room for improvement,” Roca said in an interview. “Obviously, it will depend on the type of company and sector, but I think we will see an IPO window in Brazil and Mexico as well,” he added, saying that next year’s presidential election in Brazil is unlikely to change that outlook.
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Antonio Coutinho, head of investment banking at Citi in Brazil, said 2026 will not be a “huge year” for the market, “but it will be a year in which we will be in recovery mode.” He didn’t name specific companies likely to debut, but said infrastructure companies are likely to lead the next wave.
“It will probably start with some of the broader infrastructure sector,” he said.
Roca said the US market will continue to be the preferred destination for listings of Brazilian technology companies.
In Brazil, where the benchmark interest rate is 15%, many companies that have relied on debt in recent years are now exploring share sales.
“Companies are trying to use capital markets to preserve their balance sheets, and the discussion about follow-on is happening much more frequently these days,” said Coutinho. Earlier this year, Meliuz SA, Gafisa SA and Empreendimentos Pague Menos SA made secondary share offerings.
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After several years of investor focus on infrastructure — a sector that Coutinho described as “more resilient” — the pipeline is becoming more diversified, including retail, financial and natural resources companies, he said.
“Clients are more comfortable with the environment and are being less conservative in their growth plans,” he said.
Opportunities in Central America
While Brazil and Mexico continue to account for the majority of operations in the region, Roca said Central America and the Caribbean are attracting increasing attention from banks.
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“There are very sophisticated groups with strong swings trying to go beyond their backyard,” he said. “This will continue, and we will see more transactions both in the US and across Latin America.”
Citi recently advised Guatemalan Cementos Progreso and Castillo Hermanos on transactions in the region, which it called an important area in Latin America for Citigroup. “And we’ve had a lot of success helping these companies grow,” Roca said. “We will continue — this is a priority for us.”
The bank has also seen growing interest in the region internally, Coutinho said. Citi recently hired two managing directors: Marcela de Souza Bretas for investment banking in Brazil, leading coverage for consumer, retail, media and real estate; and Juliana Medina as head of consumer, retail and agribusiness for Latin America.
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“We are seeing many of the global heads from different segments coming to Brazil and visiting us,” said Coutinho. “There’s a lot of interest.”
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