VC firms emerge as big winners as younger and smaller companies go for IPOs, according to Confiance Invest.
“Now, a company can dream about an IPO within five years of existence because the market is mature,” said Gustavo Poppe, head of Confiance Invest. “There is liquidity all over the market. That is the beauty of a more mature capital market.”
In the first four months of 2020, more than 40% of IPOs in Brazil came from companies less than 20 years old, while almost a quarter came from companies less than 10 years old, Confiance Invest said. A third of them had less than BRL300 million ($56.5 million) in sales, it added.
“There is some appetite for companies with just 10 years of experience and sales of less than BRL300 million. It did not use to be the case,” Poppe said.
The number of IPOs in Brazil came to 22 in the first four months of the year, equal to 79% of the number registered during the same period last year. M&A deals, meanwhile, rose 120% year-on-year in the same period, according to Confiance Invest.
“We see greater liquidity for IPOs of smaller and younger companies and also for M&As with a stronger intensity in input operations or venture capital, which translates in greater attractiveness for such a market as there are likely greater exit opportunities,” Poppe said.
One such example, Enjoei, an 11-year-old online marketplace, raised BRL1.13 billion in an IPO in November last year.