Companies turn to “reverse IPOs” to gain stock exchange access

Private-sector investors acquire listed firms in Brazil as traditional IPOs remain scarce

 

 

09/29/2025 

With Brazil’s initial public offering market in a prolonged drought—more than four years without a wave of listings and no clear signs of recovery—some private companies are considering a backdoor route to go public: acquiring firms already listed on the B3, Brazil’s main stock exchange. The strategy is known as a reverse IPO.

These targets are often small-cap companies with very low trading volumes. Many of them went public during the IPO boom at the height of the pandemic but have since become minor players in the market, with little prospect of regaining relevance among investors.

Valor has learned that some of these listed companies are working with investment banks to signal their openness to being acquired for a reverse IPO. One such candidate is Westwing, a home décor e-commerce company currently valued at R$58 million on the B3.

People familiar with upcoming deals said the next reverse IPO may involve Oranje, a newly launched bitcoin treasury operation that acquired Intergraus, a college prep course provider, from Bioma. The deal, announced in May, was conditional on Intergraus registering as a public company and being listed on the B3. Last week, Oranje confirmed its intention to carry out a reverse IPO in October.

Another case is real estate developer BRZ, which had been pursuing a traditional IPO for years but ultimately opted to merge with Fica, a listed company in the same sector that has long been forgotten by the market.

Reag, a fund manager recently caught up in the “Hidden Carbon” police operation, also executed a controversial acquisition when it took over Getninjas, a services marketplace. Sources who requested anonymity said Getninjas had attracted interest from other companies looking to list via a reverse IPO. The appeal, in that case, was that the company had more cash on hand than its market cap, due to a steep decline in its share price.

An investment banking executive specializing in equities said several companies are exploring this route, although the cases remain isolated. He noted that any buyer would likely need to carry out a follow-on share offering once market conditions improve to restore liquidity.

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BRZ’s Chief Financial Officer and Head of Investor Relations Fabiano Valese said the lack of visibility on when the IPO market might reopen weighed heavily on the decision. He also pointed to synergies with Fica’s landbank. “This move shortens our path to becoming a listed company, and we’ll have a significant landbank,” he said.

Mr. Valese recalled that BRZ maintained internal plans for an IPO even after the initial attempt was derailed by rising volatility and interest rates. The company already operates day to day as if it were publicly traded, he said. More recently, BRZ began holding talks with investors. The merger with Fica is expected to close in the coming months, which will mark BRZ’s official debut on the B3.

Conrado Stievani, a partner in capital markets at law firm BMA, said his office has received inquiries about reverse IPOs. He noted that some companies are doing the math to decide whether to buy a listed company and carry out a future follow-on, or simply wait for IPO windows to reopen.

“There are companies looking at this option,” Mr. Stievani said, but he emphasized that any company pursuing this path must prepare for the operational complexities and due diligence involved in such acquisitions.

Henrique Ferreira Antunes, a capital markets partner at law firm Mattos Filho, said some buyers are also eyeing reverse IPOs as a way to make use of tax losses accumulated by the target company. “But they must consider any hidden liabilities tied to that corporate registration,” he warned.

Another issue, Mr. Antunes noted, is the post-transaction challenge of repositioning the company under a new brand. This typically involves an “educational” effort and “non-deal roadshows”—investor meetings not tied to a specific transaction.

Mr. Antunes also stressed that any firm going public via a reverse IPO must be ready for life as a listed company, which includes regular earnings reports and constant market communication.

Gustavo Rugani, a partner at law firm Machado Meyer, said that in practical terms, a reverse IPO is essentially a merger and acquisition deal between a private company and a public one. “And in a market like this, where conditions are unfavorable for traditional IPOs, it works as a shortcut,” he said. “It’s about seizing the moment. In 20 years working in this field, I’ve never seen such a long dry spell for IPOs.”

Contacted by Valor, Westwing said it is currently focused on profitability and growth, and that “a reverse IPO is not in the company’s short-term plans.”

Oranje said it would limit its comments to the material fact disclosure already made to the market. In it, the company said the acquisition of Intergraus “is aligned with its strategy of building an educational platform based on non-degree courses” and that Intergraus “has a strong brand and valuable intangible assets that will support growth” in its operating markets.

Fund manager Reag did not respond to requests for comment.

*By Fernanda Guimarães — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil’s trade agency urges shift to high-value exports to China

Commodities still dominate trade, but ApexBrasil sees room for growth in processed foods, e-commerce and sustainable products

09/29/2025 

Even as China’s growth slows—from double-digit rates between 1980 and 2010 to a projected 4.5% to 5% annually—the country continues to offer Brazil opportunities “hidden in the big numbers” of commodity trade.

A study by the Brazilian Trade and Investment Promotion Agency (ApexBrasil), commissioned by Valor, found that the slower pace reflects a shift in the nature of opportunities rather than a decline in their number. China’s new growth cycle prioritizes quality over quantity, creating space for Brazil to supply higher value-added goods aligned with the country’s evolving economic model.

The agency, which operates under the Ministry of Development, Industry, Trade, and Services and maintains offices in China, has been mapping opportunities for Brazilian exports and investments.

China’s slowdown reflects structural factors such as an aging population, the shift to a more service- and innovation-driven economy, and domestic adjustments to reduce dependence on heavy infrastructure spending and low-tech industries.

Even at a lower rate, China’s growth remains among the highest of major economies. In absolute terms, Apex noted, it means adding to the Chinese GDP each year the equivalent of the entire economy of a mid-sized nation, keeping China a strategic market for Brazil.

New niches for Brazilian exports

China’s current growth phase brings trends favorable to Brazilian exporters: food security remains a top priority; the urban middle class drives demand for convenience and higher-value goods; e-commerce, which accounted for nearly 30% of consumer goods sales in 2024 in a market valued at $2.22 trillion, creates visibility for coffee, wine, and fruit; and there is growing demand for natural and functional foods tied to health and well-being.

Though bilateral trade remains dominated by commodities, there are underexplored niches with high added value. Processed foods, soy products, juices, healthy snacks, and frozen convenience items could meet the needs of Chinese urban consumers. Beyond food, natural cosmetics, wines and sparkling wines, wood products and sustainable design, biotechnology and supplements, renewable energy, and strategic minerals also hold promise. Brazil could also expand in pulp and bioproducts, moving into sustainable packaging and specialty papers.

Apex stressed that Brazil must look beyond traditional commodities, with e-commerce as a strategic channel. Chinese consumers are increasingly demanding, making it crucial for Brazil to deliver products that stand out in quality, innovation, and sustainability. Such a shift would benefit not only companies but also supply chains, local communities, and the broader economy.

Export diversification challenges

Tatiana Prazeres, Brazil’s secretary of foreign trade, said the country’s export profile to China is already changing, though without altering the dominance of “big numbers.” With soy, oil, and iron ore still accounting for about 75% of exports, other products’ gains are not yet visible on the macro scale tracked by analysts.

“Brazil doesn’t need to settle for selling soy, oil, and iron ore to China. That reality is often overlooked by those who focus only on the macro view,” she said in an interview with Valor. She pointed to export categories that saw dramatic growth from 2024 to 2025: chocolate and cocoa-based preparations, virtually nonexistent before, rose more than 1,000%; plastic pipes and fittings nearly 980%; faucets and valves nearly 800%; essential oils more than 100%; and frozen beef about 40%.

Though small in absolute terms, these gains could signal underexploited markets for Brazil, she added. “This doesn’t move the needle on our overall export profile to China, but for the companies involved it can be transformative. Even for supply chains and local communities. And in a challenging global context, finding new destinations is highly relevant.”

For Ms. Prazeres, the main challenge lies in the lack of knowledge about China. She highlighted three layers in foreign trade: competitiveness, export support, and the relationship with China. The first two are limited by the so-called “Brazil cost” that affects all markets. The third is unique, shaped by widespread lack of understanding of the Chinese market. She argued that all three must be tackled simultaneously.

“The private sector needs to be more present in China. You need to have a physical presence, build relationships, understand the Chinese digital ecosystem, which is completely different from ours,” she said. While China is competitive in industrial sectors, she noted, it does not impose high barriers to industrial goods, leaving opportunities that Brazilian companies still need to explore.

She said public-private partnerships should drive these efforts, since many private initiatives rely on proper government support. At the same time, companies themselves must engage to turn opportunities into actual business.

Former Secretary of Foreign Trade and BMJ Consultants partner Welber Barral noted that value-added products do have a strong impact on supply chains, but said the private sector bears the first responsibility. Because this is a niche agenda, it largely involves small and medium-sized enterprises (SMEs), which remain inexperienced in exporting. “I think the private sector lacks initiative. Companies still look too little to exports. They could do more, and then demand more from the government as well,” he said.

The National Confederation of Industry (CNI) highlighted that Brazil’s low innovation levels limit the ability of firms, especially SMEs, to compete in sophisticated markets that require high-tech, differentiated products. Exporting remains a challenge not only due to lack of initiative or know-how but also external hurdles such as logistics bottlenecks, high transport costs, port inefficiencies, infrastructure gaps, currency volatility, interest rates, and Brazil’s still-recent national trade strategy.

The CNI called for partnerships in research, development, and innovation. It argued that “targeted financing lines, innovation programs, legal certainty, and professional training are essential conditions.”

*By Giordanna Neves — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Brazilian stock market needs more attractive instruments

Experts say conditions are not favorable for companies

 

 

 

09/25/2025 

The dearth of initial public offerings, high borrowing costs, and difficulties in lowering the cost of capital remain the main challenges in Brazil’s capital markets, according to government officials and financial sector representatives. They argue that it is essential to create attractive instruments for investors and proper conditions for companies to return to the stock exchange, which would help democratize and boost the market.

Brazilian Development Bank (BNDES) President Aloizio Mercadante said on Wednesday (24) that “a development bank is not just about credit” and that holding equity positions is in line with the best practices of peer institutions worldwide. Mr. Mercadante emphasized that the private sector is decisive in the capital market and that the bank’s role is to strengthen the system in strategic areas. “We cannot replace the private sector. It’s like acupuncture: we insert the needle in the right spot to make the system better,” he said at an event held at BNDES headquarters in Rio de Janeiro.

At the same event, Vice President Geraldo Alckmin highlighted that the bank’s support will be key for strategic sectors such as decarbonization, healthcare, biotechnology, startups, and critical minerals—especially at a time when borrowing costs remain high, with the Selic policy rate at around 15% per year.

While Brazil has seen no IPOs in recent years, India registered at least 100 last year, said XP CEO José Berenguer. According to him, the lag in Brazil’s market can be explained by the current level of interest rates and “the tax incentives given to fixed income.” He argued: “We continue with this habit of creating tax breaks that end up boosting fixed income and eliminating any chance for the equity market to develop.”

Itaú Unibanco CEO Milton Maluhy Filho said Brazil’s biggest challenge in equity markets is the cost of capital. “This cost has two aspects: institutional, so foreign investors can look at Brazil as a safe harbor, and legal, to ensure that investments are made under clear and reliable rules.”

He added that with the prospect of lower Selic rates, along with improvements in institutional and legal frameworks, Brazil could reduce the cost of equity and raise investment levels. Mr. Maluhy Filho stressed that foreign investment is crucial for the country’s development and that Brazil must open its borders and stimulate this market.

Treasury Secretary Rogério Ceron indicated that another sovereign sustainable bond issuance (“green bonds”), similar to those tied to the Climate Fund, could take place this year. Brazil issued its first such bond in November 2023 and a second in June 2024. The expected size of the offering is about $2 billion, or roughly R$10 billion.

Mr. Mercadante also reiterated that BNDES intends to maintain tax-incentivized debentures and that discussions about their taxation are “settled” with the Finance Ministry. He stressed that incentivized infrastructure debentures are “indispensable.” “You cannot finance a project over 25 or 30 years, as we do, without having this kind of instrument to attract the private sector.”

*By Jessica Alexandra and Victoria Netto — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Data will guide timing of rate cuts, Central Bank chief says

Gabriel Galípolo notes communication challenges as Selic base rate stays elevated

 

 

09/26/2025 

Brazil’s Monetary Policy Committee (COPOM) will determine how long to keep interest rates elevated based on future economic data, said Central Bank Chair Gabriel Galípolo. He emphasized that the institution remains guided by the principles of “perseverance, firmness, and serenity.”

“This is a central bank that remains data-dependent, and tries to be as transparent as possible about what it sees and how it’s likely to respond,” Mr. Galípolo said during a press conference on Thursday (25) about the Monetary Policy Report.

The COPOM kept the benchmark Selic rate at 15% last week and said it would remain “vigilant,” evaluating whether maintaining this level for a prolonged period would be enough to bring inflation down to its 3% target.

Mr. Galípolo said this marks a new phase in the tightening cycle, one that brings challenges “in terms of explaining our work to the public.” He added that the committee had anticipated this more complex stage.

Central Bank Economic Policy Director Diogo Guillen explained why last week’s COPOM statement no longer included the phrase, used in the July meeting, that referred to a “pause” in the rate hike cycle, language that had left the door open for rates to rise above 15% if needed.

Mr. Guillen said the committee is now more confident that the economic scenario is unfolding as expected, making it possible to move past the idea of a pause. The focus now is on whether the current level of interest rates is sufficient for inflation to converge toward the target.

The Central Bank’s stance—keeping interest rates at their highest level in nearly two decades for an extended period—has drawn criticism this week from Finance Minister Fernando Haddad. On Tuesday, he said the current rate level was unjustified and that there was room for cuts. Still, he acknowledged that Mr. Galípolo took over in the midst of a “major crisis” and that he was not in his position.

Asked about the criticism, Mr. Galípolo said it was “absolutely legitimate” for the finance minister to voice his opinion. He also referred to recent remarks by National Treasury Secretary Rogério Ceron, who said the high Selic rate “hurts” from a fiscal policy standpoint, but also recognized that monetary policy must be conducted and has been “very successful.”

“Personally, I think it’s a luxury to have the Finance Minister and the Treasury Secretary making comments on monetary policy with such delicacy, kindness, and respect,” Mr. Galípolo said.

He added that concerns that high interest rates could trigger a “sharp downturn” in the economy have eased, as have doubts about whether monetary policy would succeed in steering inflation toward the Central Bank’s projections.

“Things are moving toward what looks like a softening of economic activity, precisely to protect workers’ income,” he noted.

The Central Bank’s updated GDP forecast points to 2% growth in 2025, with a slowdown in the second half of the year that is expected to continue into 2026, when the economy is projected to grow 1.5%. Meanwhile, inflation is expected to continue declining, reaching 3.6% at the end of 2026, 3.2% in 2027, and 3.1% in the first quarter of 2028. The inflation target is 3%.

Mr. Galípolo also commented on planned changes to the housing credit system. He said a new framework is being developed and will be discussed at a meeting of the National Monetary Council (CMN). “We can’t wait until savings start running low,” he said, noting that this could force the government to find a new solution without enough resources to ensure a smoother transition to the new system.

“Our view at the Central Bank is that the longer we wait, the fewer tools, less room, and fewer instruments we’ll have to cushion a potential transition.”

Mr. Galípolo also said that finding a solution for the proposed constitutional amendment on the Central Bank’s financial autonomy depends on internal consensus.

He noted that the government supports the proposal, but there is resistance regarding changes to the Central Bank’s legal status—from a public-law to a private-law entity—and to the labor regime for its staff, who would shift to the private-sector labor code (CLT). “From both the Senate’s and the government’s perspective, the ball is now somewhat in our court,” he said.

*By Gabriel Shinohara, Alex Ribeiro, Giordanna Neves and Anaïs Fernandes — Brasília and São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazilian firms lobby U.S. to ease tariffs imposed by Trump

Lobbying by JBS, EMS, Suzano, and Embraer highlights U.S. political divisions over trade with Brazil

 

 

09/26/2025

Brazilian executives and business leaders from major companies affected by Donald Trump’s tariff surge have been lobbying intensively in Washington to reverse the impact of the trade measures imposed by the U.S. president since August.

Embraer successfully negotiated, setting an example for other powerful entrepreneurs—such as the Batista brothers, owners of JBS, Carlos Sanchez of pharmaceutical giant EMS, and companies from other industries like Suzano—to pursue tariff reductions or eliminations.

Sources indicate a division within the U.S. government regarding Mr. Trump’s heavy-handed tariff policy toward Brazil. On one side, a more hardline faction supports the surcharges; on the other, a pragmatic group of lawmakers believes the decision is “pushing Brazil into China’s arms” and bolstering President Lula’s narrative.

“Moderate lawmakers understand that Brazil exports products not produced in the U.S., and many American companies are being harmed,” said one source. “There is also concern about inflation.”

Brazilian companies have been holding regular meetings with White House officials to negotiate inclusion on the list of exemptions—about 700 items were added last month. Pulp was removed from the list, but paper remains subject to U.S. tariffs.

Carlos Sanchez of EMS told Valor that he hired a lobbying firm in the U.S. The businessman was in Washington about two weeks ago to defend his company’s interests. While pharmaceuticals were not directly affected by the U.S. measures, EMS imports raw materials from the U.S. and operates a factory in Atlanta. “Trump signaled that he is reviewing the pharmaceutical sector because drugs are expensive in the U.S., and much of the supply comes from Europe,” Mr. Sanchez said.

“Many [lawmakers] have no idea what is happening in Brazil. We explained that we are a democratic country,” Mr. Sanchez added. About two weeks ago, Mr. Sanchez said that he had also met with representatives of JBS in Washington.

Joesley Batista of the J&F group, the holding company controlled by the Batista family and owner of JBS, known for his close ties with President Lula, was among those who gained direct access to Mr. Trump.

The meeting, held at the White House in early September, may have helped persuade the American leader to consider reopening negotiations with Brazil, whose tariffs have severely impacted beef exports.

Valor has learned that the meeting between Joesley Batista and Mr. Trump was not initially aimed at discussing the surcharge on Brazilian animal protein. Instead, it was arranged as part of an institutional agenda due to J&F’s size and importance in the U.S., where the group employs 75,000 people and accounts for half of its revenue.

Against this backdrop, the conversation started with J&F’s investments in the U.S., but Mr. Batista took the opportunity to raise concerns about the effect of tariffs on Brazilian products and on consumer prices in the American market.

According to people familiar with the meeting, Mr. Batista told President Trump that the 50% tariff would directly affect hamburger prices in the U.S. He argued that without Brazilian beef, U.S. processors would be forced to use more expensive meat to produce burgers.

Mr. Batista also reportedly warned Mr. Trump of similar consequences in coffee and orange juice—two other major Brazilian exports to the U.S.

Attention now turns to the upcoming meeting between presidents Lula and Trump, scheduled for next week.

*By Mônica Scaramuzzo, Renan Truffi and Sofia Aguiar — São Paulo and Brasília

Source: Valor International

https://valorinternational.globo.com/

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Central Bank sets conditions to lift Pix, TED transfer cap

Financial institutions must boost cybersecurity and capital to remove limits on Brazil’s instant payment and wire systems

 

 

09/25/2025 

Regulation outlines conditions under which the Central Bank may authorize a temporary waiver of transaction limits
Regulation outlines conditions under which the Central Bank may authorize a temporary waiver of transaction limits — Photo: Divulgação/BC

Brazil’s Central Bank has detailed the requirements for financial institutions using third-party technology providers to request a waiver from the R$15,000 limit per instant payment (Pix) or same-day wire transfer (TED) transaction, announced earlier this month. Among the conditions, firms must implement real-time transaction monitoring and maintain a capital buffer as collateral.

Earlier in the month, the Central Bank had indicated that financial institutions using IT Service Providers (PSTIs) to connect to Brazil’s National Financial System Network (RSFN) could apply for a 90-day exemption from the cap if certain security controls were in place. The regulation, now published in the Official Gazette, defines what those controls are.

PSTIs are tech firms that enable smaller firms to connect to the RSFN, allowing them to operate services like Pix for clients. Two of these providers were recently hit by cyberattacks that compromised millions of accounts managed by institutions using Central Bank infrastructure. In response, the regulator tightened rules for both the providers and their client institutions to strengthen cybersecurity.

The new regulation outlines the conditions under which the Central Bank may authorize a temporary waiver of transaction limits. To obtain permanent exemption, both institutions and their PSTIs must comply with the more comprehensive security controls published on September 5.

Kenneth Ferreira, a partner at law firm Lefosse specializing in banking and financial services, said the exemption is not “broad,” but an “exception contingent on technical robustness and control,” aimed at increasing the safety of institutions using PSTIs.

The waiver applies only on weekdays between 6:30 a.m. and 6:30 p.m. in the case of Pix transactions. For both Pix and TED, the waiver can be renewed for additional 90-day periods, provided the firm has not experienced “serious operational deficiencies or failures.”

Rodrigo Caldas de Carvalho Borges, a partner at law firm CBA Advogados, said the time-bound nature of the waiver enhances security, as the limited timeframe increases oversight, potentially allowing for quicker detection and response to incidents.

To qualify for the waiver, financial institutions must maintain a capital reserve equal to 100% of the highest daily interbank transfer volume processed through their Instant Payment Account (Conta PI) in August, in the case of Pix. For TED, the reserve is based on the highest daily transaction volume made from their Reserve Account or Settlement Account.

Mr. Borges noted that this requirement serves as a financial cushion. “The institution must prove it has unencumbered capital equivalent to its peak transfer day in August. The goal is to ensure that, in the event of large-scale fraud, the institution can absorb the losses on its own, avoiding collapse and systemic risk,” he said.

Firms must also meet governance criteria, including not sharing or storing private keys used to sign RSFN messages within PSTI environments—one of the vulnerabilities exploited in recent cyberattacks.

They must also use distinct digital certificates for different systems and regularly update access permissions, especially for third-party contractors with access to core systems or reserve operations.

Mr. Ferreira said that while the new rules will likely improve security and reduce vulnerabilities, they won’t eliminate the risk of hacking. “Security depends not just on regulations, but also on technical excellence in implementation, audits, penetration testing, corporate governance, incident response, continuity planning, and constant review,” he noted.

To be eligible for the waiver, financial institutions must demonstrate real-time monitoring of atypical or fraudulent transactions. The regulation also requires mechanisms to suspend transaction processing in the event of a suspected severe compromise of their own systems or those of the contracted PSTI.

“We’re seeing an escalation in cyberattacks, and recent events have taught us important lessons,” said Ailton de Aquino Santos, the Central Bank’s director of supervision, during an event in São Paulo. “Criminal activity is migrating from the physical to the virtual world, and financial stability increasingly depends on cybersecurity.”

(Vinícius Lucena contributed reporting from São Paulo.)

*By Gabriel Shinohara, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Industry closes ranks after clashes over imported steel

Industrial consumers shift tone, now call for more competitiveness across production chain

 

 

09/25/2025

The dispute over imported steel between Brazilian mills and steel-consuming industries has entered a new phase. Once firmly opposed to tariffs, automakers and machinery manufacturers, keen on cheaper inputs, are now rethinking their position.

The reason: China is no longer exporting just basic steel products. It has begun shipping higher-value goods, competing directly with local automakers, machinery suppliers, and other industries.

The extension of Brazil’s steel import quota system until 2026 has divided opinion on trade policy. Mills argue that quotas are insufficient to curb the surge of cheap imports, particularly from China. Steel-consuming industries acknowledge that barriers raise domestic costs but are shifting the debate toward long-term competitiveness.

Antônio Sérgio Martins Mello, institutional relations director at Stellantis and vice president of automaker association ANFAVEA, stressed the need for alignment: “For us to sell cars at competitive prices, we need competitive inputs. In this debate, we are not advocating for tariff cuts on steel—that’s not the plan. The time has come to unite,” he said at the 2025 Aço Brasil industry congress.

The statement marked a turning point: a sector once resistant to tariffs now avoids pushing for tax relief and instead seeks stability in the supply chain—a reaction to the growing presence of Chinese cars in Brazil.

The machinery industry faces an even sharper dilemma. Steel accounts for about 40% of production costs, said Claudio Brizon, director at CNH Industrial. The sector depends on affordable inputs to compete globally, but according to data from the Brazilian Machinery and Equipment Industry Association (ABIMAQ), imports of ready-made Chinese equipment could exceed $10 billion in 2025.

ABIMAQ President José Velloso warns: “We also face unfair competition with Chinese products because China subsidizes, provides cheap financing, manipulates exchange rates, and grants exporters non-repayable loans.”

MRV, Brazil’s largest homebuilder, adds nuance to the picture. CEO Eduardo Fischer acknowledged that quotas raise building costs but argued that safeguarding local industry is crucial to avoid overreliance on Asia and potential problems in the future. “We must strike a balance between keeping national industry competitive without destroying it, but also ensuring it doesn’t overcharge,” he said.

Although construction firms face little direct competition from Chinese players in their end markets, they worry about long-term supply risks.

This repositioning is part of a wider trend. China has structural overcapacity in steel, machinery, autos, electronics, and energy. With the U.S. and EU tightening trade barriers, exporters are redirecting excess output to more open markets such as Brazil.

The impact is already visible. Imports could surpass 6.2 million tonnes of steel this year, equal to 30% of domestic flat steel sales.

Chinese-made cars now hold 7.8% of Brazil’s market, according to August registration data. BYD has overtaken Honda in sales, while Chinese machinery already represents nearly half the market.

Caught in the middle, the Brazilian government has sought compromise. It extended the quota system until May 2026, with a 25% tariff on imports above the cap, and expanded the list of covered products from 19 to 23. It also launched its largest-ever antidumping probe, targeting 25 steel items from China.

But the balancing act faces political hurdles. China is Brazil’s top trading partner, buying vast volumes of farm goods and minerals, as well as an ally in the BRICS bloc. Tougher trade barriers could spark retaliation. At the same time, the U.S., a key market for Brazilian steel, keeps its own tariffs in place, forcing Brazil into careful diplomatic maneuvering.

Experts say Brazil can defend its industry without alienating Beijing, but room for maneuver is limited. The solution, they argue, lies in combining defensive trade measures with industrial policy to keep China as a partner while sustaining domestic competitiveness.

According to Márcio Sette Fortes, a professor of international relations at Ibmec RJ, the Chinese push stems from weaker exports to the U.S. “China has both upgraded its product mix and redirected sales to more open regions like Latin America. Brazil can rely on antidumping, countervailing duties in cases of unfair competition, or safeguard measures when surging imports hurt domestic production,” he said.

Rodrigo Scolaro, an economist at intelligence platform GEP Brasil, added that weak steel demand in China fuels exports. There was an expectation of production cuts in a deflationary environment combined with higher trade barriers abroad, but that hasn’t happened yet, he noted.

*By Robson Rodrigues  — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Assaí sues French Casino, seeks freeze of Brazilian retailer GPA shares

Brazilian cash&carry chain asks court to block R$475m stake amid dispute over tax liabilities of Pão de Açúcar’s parent company

 

09/25/2025

Cash-and-carry chain Assaí has filed a lawsuit against French retailer Casino, requesting a freeze on all of its shares in GPA, after being notified that it could be held liable for the tax contingencies of Pão de Açúcar’s controlling shareholder.

The case was filed on Wednesday (24) at São Paulo’s Business and Arbitration-Related Disputes Court.

Currently, only part of the tax liabilities is being pursued by the Treasury—about R$36 million. However, the risk of further claims prompted Assaí to request a remedy to block 22.5% of Casino’s stake in GPA, valued at roughly R$475 million.

According to people familiar with the matter, Assaí fears Casino could sell the remaining 110 million common shares it still holds in GPA and transfer the proceeds to France. Casino already has a plan to monetize the stake and is seeking buyers. If new tax claims arise, with the capital moved abroad, Assaí argues it would be left exposed.

In its financial statements, Casino already classifies its Brazilian operations as discontinued.

An arbitration proceeding is expected to be opened within 30 days at the Brazil-Canada Chamber of Commerce Arbitration and Mediation Center. But such cases take an average of three years, which led Assaí to file an application for injunctive relief.

Assaí was a GPA subsidiary until 2020, when Casino took over GPA’s control. Currently, the French retailer is GPA’s second-largest shareholder, behind the Coelho Diniz family.

Last week, Brazil’s Attorney General’s Office of the National Treasury (PGFN) notified Assaí of the opening of an Administrative Liability Recognition Proceeding (PARR). The Treasury considers Assaí jointly liable for debts incurred while it was part of the same economic group as GPA (2007–2020). GPA disputes this, as it publicly stated in October 2024.

Under Brazil’s National Tax Code, however, companies can be held jointly responsible for contingencies related to acts and events that occurred before a corporate spin-off. These could involve disputes over social taxes PIS and Cofins or Tax on Financial Transactions (IOF).

Assaí could also face liability for other GPA-related obligations. According to a person with access to transaction documents, GPA has around R$17 billion in total contingencies and 5,000 municipal, state, and federal tax assessments. Assaí could be exposed to a portion of these related to the pre-2020 period.

In GPA’s second-quarter balance sheet, legal proceedings with guarantees and surety bonds totaled R$13.5 billion.

In its filing, Assaí argues that GPA’s owners acted abusively by selling assets in Brazil and distributing dividends to shareholders in Europe despite billions in contingencies.

Part of those dividends helped Casino pay foreign creditors during its debt restructuring proceedings in France after 2018.

A former Pão de Açúcar executive recalled that independent members had seats on the board of directors before the spin-off, as did Casino, which led the board at the time when these contingencies were growing. He added that there was widespread concern within the company that the amounts could escalate.

“However, there wasn’t much to be done since Casino, through Arnaud Strasser and others such as Ronaldo Iabrudi, had the decision-making power,” the person said.

In September last year, the Federal Revenue listed R$1.3 billion in Assaí’s assets as collateral for potential GPA debts. In October, however, GPA successfully appealed, and the measure was lifted.

At the time, GPA acknowledged responsibility for Assaí’s legal cases, which totaled R$36 million—R$4 million tax-related, R$15 million labor, and R$17 million civil.

The issue resurfaced because, according to people close to the matter, the Treasury is exploring alternative ways to hold Assaí accountable.

The chain argues it could only act now, after being formally notified of the PARR. The company is represented by the law firm Mattos Filho.

The Federal Revenue monitors whether companies maintain at least 30% of their assets to cover contingencies. Alerts are triggered when asset levels fall below that threshold.

Assaí’s advisers believe GPA’s asset sales, including the Colombian Éxito chain, reduced this ratio and drew the Treasury’s attention. That led the PGFN to look to Assaí, once part of GPA, as a potential source of recovery.

Following the PGFN notification, Assaí has 15 days to submit its administrative defense. The process may require deposits in court or guarantees.

Market participants expect GPA shares to respond to the development in Thursday’s (25) session, as Casino considers selling the stake to meet financial covenants with foreign creditors, a move Valor reported earlier. A decline in share value could affect those plans. Casino declined to comment.

This marks the first time Assaí has taken legal action against Casino. The cash-and-carry chain still carries debts left behind by the French group.

When Assaí was separated from GPA five years ago, it inherited about R$8.5 billion in debts from Colombian unit Éxito, a decision imposed by Casino. At the time, Assaí was GPA’s main cash generator.

Roughly 90% of Assaí’s current liabilities stem from that legacy debt burden, compounded by high interest rates. The company became fully independent in 2021 after its spin-off from GPA and is now a publicly traded corporation with no controlling shareholder.

“This story seems endless,” said a longtime observer. “Assaí was saddled with Éxito’s debt at Casino’s insistence, and suffered governance-related share discounts while Casino was still a shareholder. Then Casino left, and the problems continued to follow Assaí.”

*By Adriana Mattos — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil mulls higher taxes on real estate, agribusiness credit instruments

Congressional rapporteur’s plan would raise income tax to 7.5% while preserving exemptions for infrastructure, agribusiness receivables

09/24/2025 

The rapporteur of the provisional presidential decree that serves as an alternative to the Tax on Financial Transactions (IOF), Congressman Carlos Zarattini (Workers’ Party), will propose increasing the income tax (IR) rate on Agricultural Credit Bills (LCAs) and Real Estate Credit Bills (LCIs) from 5% to 7.5% starting in 2026. The change aims to preserve the exemption on infrastructure bonds, as well as Real Estate (CRIs) and Agribusiness Receivables Certificates (CRAs).

Mr. Zarattini also presented a proposal granting income tax exemption for real estate investment trust (REIT) and agribusiness chain investment funds (Fiagros) with at least 100 shareholders, a profile that currently represents most of the market. The government’s original proposal had set a 5% tax on these investments.

The agribusiness caucus, the largest in Congress, is firmly against raising taxes on agribusiness securities. “We will not accept 7.5% on LCAs,” said Congressman Pedro Lupion, president of the Parliamentary Agricultural Front (FPA).

The report was expected to be submitted on Tuesday (23) to the joint committee of Congress. However, at the request of Lower House Speaker Hugo Motta, its presentation was postponed so the text could first be discussed in a leaders’ meeting. Mr. Zarattini said the party leaders made suggestions, but he does not yet know which will be incorporated. He expects to release the report on Wednesday (24), with a vote at the committee likely on Tuesday (30).

The rapporteur said he will maintain in his report the government’s proposal to establish a fixed 17.5% income tax rate on financial investments in Brazil starting in 2026. This will end the staggered system, which charged 22.5% on investments of up to six months and 15% on those longer than two years. He also said he will maintain the increase in the tax rate on interest on net equity (JCP) from 15% to 20%.

The government’s proposal also granted income tax exemption to foreign investors, provided they are not based in tax havens. The rapporteur broadened this benefit to include certain over-the-counter transactions and the issuance and redemption of depositary receipts in Brazil or abroad. He also kept the 25% tax on earnings of investors domiciled in tax havens, but set the rule to take effect one year after the law is enacted.

Mr. Zarattini also proposed raising the tax on Guaranteed Real Estate Bills (LIG) for individuals from 5% to 7.5%. In the case of LCI, LCA, and Mortgage Bills, he suggested a 7.5% rate for individuals and 17.5% for companies. He also expanded the allocation requirement of LCAs from 65% to 80% and included an “update of the legal framework,” without giving further details.

Mr. Zarattini also introduced a change exempting companies and setting a 7.5% tax on individuals’ earnings from Development Credit Bills (LCDs). The government’s original plan had been 17.5% for companies and 5% for individuals.

The rapporteur said he will keep the provision that establishes two rates for the Social Contribution over Net Profit (CSLL), at 15% and 20%. The 9% bracket will be eliminated, meaning companies currently taxed at that rate will move to 15%. This measure only affects financial institutions, including fintechs.

Also preserved is the government’s proposal to reinstate the 18% tax rate on Gross Gaming Revenue (GGR) from sports betting, as originally suggested by the Finance Ministry when it submitted the sector’s regulation to Congress. Lawmakers had reduced the rate to 12%. This measure has the greatest revenue potential of the package—R$10 billion—within the broader plan to raise revenue and control spending as an alternative to increasing the IOF. The Finance Ministry expects the provisional decree to generate R$20 billion.

The proposal to tax LCIs and LCAs was poorly received by asset managers and market analysts. Guilherme Almeida, head of fixed income at Suno Research, said the measure is negative because these instruments are important funding sources. “The cost associated with these sources is lower and, consequently, so is the cost of credit at the end, due to today’s exemption,” he said.

He cited a study by real estate sector associations estimating that a 5% tax increase on LCIs could raise mortgage lending rates by 0.7 percentage points. “This increase from 5% to 7.5% will have an even greater impact,” he said.

In a statement, the Brazilian Association of Real Estate Credit and Savings Entities (Abecip) said the proposed taxation of LCIs is worrisome and could directly impact mortgage credit rates.

Renato Jerusalmi, founding partner and portfolio manager at Riza Asset, said that among the available options, taxing bank securities is the most suitable because it addresses banks’ very cheap funding, typically at 92% to 94% of the CDI (the interbank deposit rate, used as an investment benchmark in Brazil). “Since banks have access to many different sources, the consolidated impact should not be so significant.” He noted, however, that the operations backing these issuances will see funding affected. “But with a developed capital market, companies have alternatives.” Overall, he said, the measure is negative because it continues the trend of taxing the productive sectors.

For Octaciano Neto, former agriculture secretary of Espírito Santo and founder of agribusiness financing consultancy Zera, LCAs should remain exempt. “Compared with the OECD average, Brazilian agribusiness receives 75% less in subsidies,” he said. He argued that the taxation will drive investors toward CRAs, which will remain tax-exempt. “On the other hand, the taxation will accelerate the capital market’s overtaking of banks in financing agribusiness,” he said.

(Rafael Walendorff contributed reporting, from Brasília)

*By Giordanna Neves, Valor — Brasília

Source: /valor International

https://valorinternational.globo.com/

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Brazil will need fiscal adjustment after 2026, Goldman Sachs says

Whoever wins next year’s election will have to persuade voters that fixing public finances is necessary, says Alberto Ramos, head of Latin America economic research at the investment bank

 

 

09/24/2025 

Convincing Brazilians that a fiscal adjustment is necessary after the 2026 election won’t be an easy task for any incoming president, given the country’s “reasonably good” economic growth over the past three years, fueled, in the words of Goldman Sachs, by “fiscal steroids.”

“The essence of populism is this short-term sense of well-being achieved through mechanisms that are unsustainable over time. The bill comes later,” said Alberto Ramos, head of Latin America economic research at Goldman Sachs. “What worries me is that after the election, whoever wins will need to push for a fiscal adjustment when the population doesn’t feel there’s a problem. Growth has been good, unemployment low, wages rising. I don’t think people will buy into the idea that we need a deep fiscal adjustment.”

Mr. Ramos contrasted Brazil’s situation with Argentina’s, where President Javier Milei won office on a platform of tough reforms at a time when the economy was already in deep trouble, facing contraction, soaring inflation, and rapid impoverishment.

“He pushed through a fiscal adjustment equivalent to 6 percentage points of GDP in an economy that also had very rigid spending, and was already suffering significantly. But it was clear to most of the population that the Kirchnerist model had failed—economically, socially, and politically,” Mr. Ramos said.

He believes part of the recent improvement in Brazilian asset prices stems from investor expectations that a new administration will take office in 2027, and bring with it a shift in economic policy.

“No matter who wins, a fiscal adjustment will be inevitable, and it won’t be easy,” he said. “If President Lula is reelected, fiscal realities will impose tighter constraints, otherwise, things won’t end well. A more conservative candidate would probably be more inclined to implement that adjustment. But my question is: Is Brazil ready?,” Mr. Ramos asked, adding that he’s not fully convinced about a scenario in which the current opposition wins either.

Mr. Ramos said the necessary overhaul would include loosening the rigid structure of public spending: changing laws that tie budget allocations to health and education, revising the rule that mandates real increases to the minimum wage, and reviewing other legislation that hardwires spending.

“We already know the path to take, if there’s political will,” he said.

Political balance

One hurdle, however, is that “Congress is not exactly the guardian of fiscal orthodoxy,” Mr. Ramos added. “The real fight between Congress and the government is just about who gets credit for the spending. The political balance may not be one that allows these reforms—some of which are constitutional—to pass. In Argentina, the crisis helped get them through. That’s not our situation, thankfully, but if we keep delaying, we may hit a breaking point that forces a much more painful and destabilizing adjustment.”

Brazil’s fiscal issues aren’t new, but have worsened recently, leaving policymakers with less room to maneuver, he said. One example: the government has already raised taxes without improving fiscal fundamentals.

“A fiscal adjustment that relies on tax hikes is already a poor-quality fix, but even so, how would society react, after four years of rising taxes?” Mr. Ramos asked. “We’ve used up our ammo without defeating the enemy. We raised taxes to spend more, not to improve the primary balance.”

Adjusting for the economic cycle, Brazil’s fiscal picture is worse than the headline numbers suggest, he said.

“When the economy was booming, the government doubled down and injected even more liquidity, overheating the system. The best time to make adjustments is when the economy is doing well. Now, it’s slowing, and they want to reverse the fiscal impulse. They should’ve held back earlier, taken advantage of the revenue from growth to build a better primary result.”

Mr. Ramos said Brazil’s economy is now slowing because it has hit “capacity constraints.” He believes the recent GDP growth of 3% or more is above the country’s potential. On top of that, monetary policy remains tight.

“But if someone arrived from another planet and saw Brazil with 15% nominal interest rates and 10% real rates, they’d assume the country is in deep recession. And it’s not—it’s just slowing, because there are credit policies, quasi-fiscal programs. The effectiveness of monetary policy has been undermined by fiscal activism,” he said.

Letting the economy slow is necessary to bring down inflation and eventually lower both inflation and interest rates, Mr. Ramos added.

“If no action is taken, that’s the path we’re on—and it’s not one we should resist, because we’re not facing an economic collapse.”

He said he doesn’t expect a “fiscal disaster in 2026,” despite it being an election year. “But we should be running a surplus,” he said. “This government’s view, which I don’t share, that the economy only grows through fiscal stimulus, paired with an upcoming election, means that the current slowdown is probably not deep enough to allow monetary policy to shift to a neutral stance.”

Even if there is room for the Central Bank to begin cutting rates in December, he said, interest rates will likely remain tight through the end of 2026.

Mr. Ramos acknowledged some improvement in headline inflation but noted that service inflation “is still far from good.” Currency appreciation and lower prices for commodities and food have helped, he said, but given those factors, “Inflation should be around 2%.”

“That’s not the case. The target is 3%, and we’ve been above it for many years. The Central Bank’s projections don’t even place 3% within the relevant forecast horizon. It’s a tough battle that requires a completely different fiscal approach from what we’ve seen over the past four years.”

“The difference between medicine and poison is dosage,” he added. “Monetary policy is the medicine, but its dosage can become toxic because of fiscal policy. Fiscal policy needs to take over the burden that monetary policy is carrying right now.”

*By Anaïs Fernandes and Eduardo Belo — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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