BTG Pactual Raises $1.93 Billion in I.P.O.

BTG Pactual, the Brazilian investment banking powerhouse, raised $3.625 billion reais ($1.93 billion) on Tuesday night in the largest Brazilian initial public offering of stock since Banco Santander Brasil went public in 2009.

BTG Pactual sold 117 million units at 31.25 reais each. Each unit represents one common share and two preferred shares of the bank BTG Pactual and three shares (one voting, two nonvoting) in BTG Participations, the holding company for BTG’s private-equity operations.

Shares are expected to begin trading on the Bovespa and the Alternext Amsterdam’s MTF segment on Thursday. The price is near the middle of the proposed range of 28.75 to 33.75 reais a unit. The volume is just below the prospectus’s maximum, including supplementary lots, of 121.5 million units.

The unit price implies a valuation of about 10 times earnings and three times book value. The Brazilian banking giants Itaú and Bradesco trade at about twice book value, according to João Augusto Salles, financial sector analyst with the Rio de Janeiro investment consulting firm Lopes Filho.

“This price is expensive, but perhaps fair, considering the bank’s potential and capital market expertise,” Mr. Salles said. But, he said, its dependence on capital market operations also makes it a high-risk investment.

The pricing matched market expectations. Mr. Salles called it “a clear success for BTG Pactual.” He estimated that it would raise the company’s Basel III capital ratio to 18 percent, giving it room to leverage up and make acquisitions.

Mr. Salles added that BTG Pactual’s success could encourage other companies to go public — and many would hire BTG to help them do it.

But he cautioned that Brazilian I.P.O.’s “depend on the international market, and a crisis elsewhere would stop everything.” The rental car company Locamerica, for instance, was the first initial offering in Brazil in nine months. It listed its shares on Monday at only 9 reais, below the target range of 11 to 14 reais. The shares have since dropped 3.3 percent.

“BTG is expensive, and though it is a very successful bank with good reasons for being expensive, we think it is exaggerated for it to be priced higher than Itaú or Bradesco,” Henrique de la Rocque, a portfolio manager with Brasif Asset Management in Rio de Janeiro, said.

Mr. de la Rocque’s firm passed on buying the I.P.O. shares. But even so, he said, “it would not surprise me at all to see the shares rise in their first day of trading.”

A further equity offering could come from BTG Pactual itself. Mr. Salles said that he had “heard on the market” that the bank was planning on a secondary offer in six months or so, to permit the partners to sell some of their shares.

“Right now they still own about three-quarters of the company. They could sell a lot and still remain comfortably in control,” he said.