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Gafisa S.A. (GFA-NYSE/ADR) has begun trading on the NYSE.  Its initial public offering of 39,676,600 common shares in the US (represents two common shares in Brazil) priced at US$24.88 per ADS.  The issue that US investors need to know is that this one is not a true IPO because it already trades in Brazil.

Merrill Lynch, Banco Itau BBA, and Citigroup were the joint bookrunners; and HSBC and UBS were the co-managers for the offering. 

This is a Brazilian homebuilder.  US homebuilders have been going through their own "funk" but Brazil is essentially a market of its own.  It is unknown just how the investment community will treat this one.  Newer investors are used to making investments in teh BRIC countries and elsewhere, but if you have been around the markets for more than a decade you will remember at least two major meltdowns in Latin America that ruined fortunes.  Gafisa has completed and sold more than 900 developments and claims to have constructed over ten million square meters.  Gafisa’s current shareholders include Equity International and GP Investments. Equity International is a real estate private equity firm chaired by Sam Zell and GP Investments is one of Brazil’s leading private equity firms.

Here was our full article after the IPO Filing with the initial details.

Jon C. Ogg
March 16, 2007

Jon C. Ogg can be reached at [email protected]; he does not own securities in the companies he covers.