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But
investment bankers are sanguine about the impact of Brazil's
presidential election this year on investor appetite for
upcoming deals.
They say investor attention is focused on global risks such as
higher U.S. interest rates and inflation or the war in Ukraine,
executives say, making a presidential contest between two
familiar faces seem like a manageable concern.
"Given the global outlook, Brazil represents an attractive
opportunity for investors as a global commodity provider, likely
overriding any potential short term political uncertainty," said
Max Ritter, managing director at Goldman Sachs & Co responsible
for Latin America.
Former President Luiz Inacio Lula da Silva has stuck to proven
left-wing rhetoric while riding a healthy lead in the polls.
However, bankers see his choice of centrist former Sao Paulo
Governor Geraldo Alckmin as a nod toward the market-friendly
policies he adopted on taking office in 2003.
Ricardo Lacerda, founder and CEO of Brazilian investment bank BR
Partners, acknowledged the risk that far-right President Jair
Bolsonaro and his supporters could challenge the election
result, after casting doubts on Brazil's electronic voting
system.
But he said interest in mergers and acquisitions remains strong
in Brazil, even as appetite for new share offerings has waned.
"Some investors are looking at Brazil again after the sharp
interest rates hikes boosted the real," Lacerda said.
The head of Latin America at Citigroup, Eduardo Cruz, said there
may be a window for renewed share issues by the end of the year,
although he expects mostly listed companies selling new stock
rather than a new wave of initial public offerings.
Even the bankers on a deal publicly criticized by Lula say there
is little sign of cold feet.
Bolsonaro's government is racing to privatize state power
company Centrais Eletricas Brasileiras SA, or Eletrobras, with a
share sale diluting the government's stake and raising more than
$6 billion before the October election.
Lula has warned "serious business leaders" to steer clear of the
deal, telling supporters at a rally that buyers taking part in
privatizations under Bolsonaro "will have to talk to us."
Three bankers involved in the Eletrobras deal, who requested
anonymity to speak freely, said they continue to see strong
interest in Eletrobras among foreign investors. They called the
comments from Lula overheated campaign rhetoric.
"There are not many assets available worldwide with a strong
upside potential as Eletrobras after the privatization", one of
them said.
(Reporting by Tatiana Bautzer; Editing by Brad Haynes and
Stephen Coates)
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