SAO PAULO, Oct 18 (Reuters) - Brazil's securities industrywatchdog CVM suspended on Friday the initial public offering ofGrupo Ser Educacional SA, saying the education company failed toinclude relevant tax information on the offering's prospectus.
In a statement, the Rio de Janeiro-based regulator said thesuspension of Ser Educacional's IPO could last for up to 30days. CVM said the prospectus lacks precise information on taxbenefits stemming from a government program offering exemptionsto universities involved in a tuition fee subsidy program.
"The suspension could be revoked, within the period abovementioned, if the irregularities found are properly fixed," thestatement said. "The decision was taken because the prospectus... did not contain the necessary information that an investorrequires to take a thoughtful investment decision."
The impasse comes amid a three-month drought in stocklisting debuts in the São Paulo Stock Exchange. Ser Educacionaland shareholders expected to price the IPO, through which theysought to raise up to 723.3 million reais ($333 million), lateron the day.
In September, the tax agency, known in Brazil as ReceitaFederal, issued new rules governing tax benefits for educationcompanies involved in the ProUni program. Under terms of thedecision, listed and potential stock market debutantes in thesector need to inform investors of the impact of such benefitson their balance sheet.
GAEC Educação SA and a shareholder have plans to raise asmuch as 626.3 million reais in an IPO next Thursday. Thecompany, which is known in Brazil as Anima Educação and ownsthree universities located in the cities of Belo Horizonte andSantos in southeastern Brazil, wants to use proceeds from theIPO to expand and strengthen its capital position.
Brazil's $11 billion-a-year education industry has grown atdouble-digit rates in recent years as a tight job market demandsa skilled labor force with better technical knowledge, strongeranalytical abilities and proficiency in foreign languages.
Initial public offerings have become a feasible fundraisingoption for college operators, language schools and learningsystems providers, just as mergers and acquisitions activity hasheated up over the past two years.
Ser Educacional sought on Friday to sell as many as 15.39million shares in a primary offering. Additionally, shareholderswanted to offer up to 15.39 million shares in a secondaryoffering. The company suggested a price tag between 19.50 reaisand 23.50 reais for the shares.
The company hired the investment banking units of Grupo BTGPactual SA, Credit Suisse Group, GoldmanSachs Group Inc and Banco Santander Brasil SA to manage the transaction.
- initial public offering