Azul Dual IPO Raises $645 Million

Azul SA dual IPO raised $645 million (2.021 billion reais) on Monday, as high demand pushed the airline to increase the size of the deal by nearly one-fifth. Azul, Brazil’s third-largest airline, launched an IPO in both Sao Paulo and New York.

The equivalent of 72 million preferred shares were priced at 21 reais each, about the midpoint of the recommended range. People familiar with the matter told Reuters that an additional 13 million shares were sold, as investors bid five times the amount of stock being offered.

Azul

Azul’s stock will begin trading on Tuesday under the symbols “AZUL” in New York and “AZUL4” in Sao Paulo.

Thirty percent of the IPO was placed in Sao Paulo, while the remaining seventy percent was placed in New York.

Azul Value

 

The offer puts Azul’s value at a 4% premium on Gol Linhas Aereas Inteligentes SA (SA: GOLL4), the carrier’s biggest rival.

Azul has attempted to go public on three previous occasions, but was forced to call off plans due to challenging market conditions. The company received the green light to launch its IPO on Friday after saying it would include projected gains estimates in its investment in TAP in its official prospectus.

In 2015, Azul raised capital through private stake sales to China-based HNA Group Co Ltd for $450 million (23.7% stake) and United Continental Holdings Inc. (UAL) for $100 million (5% stake).

Itau Unibanco Holding SA (SA: ITUB4), Citigroup Inc (C) and Deutsche Bank AG (DE: DBKGn) will act as underwriters for the offering.

Analysts say Azul shares could rise by as much as 30% due to its client loyalty plan and its investment in TAP.

The proceeds from the IPO will improve the carrier’s balance sheet. Azul plans to add foreign routes from Brazil and new jets to its fleet to help compete with bigger rivals LATAM Airlines Group (SN: LAN) and Gol.