Brazil's Azul cancels IPO

Brazil's Azul, the airline created by JetBlue founder David Neeleman, has cancelled its initial public offering, the second IPO this month to be thwarted by turmoil in the country's capital markets.

The low-cost airline has withdrawn its IPO request with CVM, Brazil's securities and exchange commission, according to a regulatory statement on Monday. The company blamed "unfavourable macroeconomic conditions" for its decision, adding that it still intended to take the airline public in the future.

The announcement comes a week after Votorantim Cimentos, Brazil's biggest cement maker, withdrew its plans for a R$10.3bn IPO that would have ranked as one of the world's largest this year.

Bankers also cited political and economic uncertainty in the country.

Azul filed its preliminary prospectus at the end of May, detailing plans to sell both new and existing shares as well as American Depositary Receipts in a simultaneous offering in the US. The company had planned to raise about R$1bn, according to one person close to the deal. Although the airline did not set a date for the offer, it had been expected to take place as early as July.

Brazil's Bovespa stock index fell 26 per cent over the first six months of this year, largely on concerns over growth, inflation and government interference in the economy. Given that the Bovespa is also weighted by liquidity as well as market capitalisation, the near-collapse of Eike Batista's listed companies such as OGX has also hit the index hard.

However, the Bovespa has gained 15 per cent since the beginning of July as investors have snapped up stocks at multiyear lows.

Currency volatility has also been blamed for dissuading companies from launching IPOs. The Brazilian real has weakened about 15 per cent against the dollar since the beginning of the year.

Last year ranked as Brazil's worst for equity offerings since 2005, with only $7.6bn raised through 28 deals, according to Dealogic. However, companies' confidence in the market was initially boosted in April this year when the insurance arm of Brazil's state-owned bank, Banco do Brasil, raised R$11.48bn. Smiles, the air miles business of the country's second-largest airline, Gol, also raised R$1.13bn in an IPO that month.

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