Funding by Brazilian companies experienced strong growth in the second half of 2020, either through the direct issuance of securities, such as Debentures, Bank Notes (CCBs) and Promissory Notes, or securitization of receivables such as Certificates of Real Estate Receivables (CRIs), Certificates Agribusiness Receivables (CRAs) and Debentures.
Even with this growing volume and greater dissemination of information, companies, entrepreneurs, intermediaries, and investors have recurring doubts about the offerings options and their characteristics.
See below the 3 main offering formats of raising funds available in the Brazilian capital market:
1. Private Placement: the company issues the securities (usually Debentures) to investors privately, without registration before the Brazilian Securities and Exchange Commission (CVM). Private placements are widely used when there are already identified and interested investors (eg family offices, financial institutions, controlling shareholders, among others), who wish to hold the securities until maturity, given that they cannot be traded on the secondary market;
2. Public Offering with Restricted Efforts: means used by companies, funds and securitization firms to issue Debentures, Promissory Notes, CRIs, CRAs, and other securities to access a greater number of capital market investors, without the need to register the offer with CVM. Offers “476”, as they are called, are public offers with restricted efforts, regulated by the CVM Regulation 476, target “professional investors”. It restricts the offering to up to 75 investors and acquisition by up to 50 of them;
3. Public Offering: a format used to raise larger volumes of funds in the Brazilian capital market, the public offering allows companies, funds, and securitization firms to distribute shares, Debentures, Promissory Notes, CRIs, CRAs, and other securities to the public generally. Regulated by CVM Regulation 400, the offer is required to be registered with the CVM, which will analyze the terms, conditions and documentation, including offering prospectus, announcements and all necessary information for retail investors to receive and understand the risks of investing in the security offered.
With the fall of interest rate to a record low 2% per year, the Brazilian capital market has gained strength and will be an important source of funds for companies, funds, and securitization firms in the coming years.