Best Insurance stock - Details of IRB Re-Insurance Co Privatization : The Brazilian government's National Development Bank , or BNDES , on Wednesday released details of its planned privatization of re-insurance company IRB-Brasil Re , based on an initial public offering of shares.
The privatization process will take place via an increase in IRB's capital. The BNDES set the price of each new share at 2 ,577 Brazilian reais ($1 ,263). The government authorized a capital increase of between 2% and 15% for IRB.
The privatization process will take place via an increase in IRB's capital. The BNDES set the price of each new share at 2 ,577 Brazilian reais ($1 ,263). The government authorized a capital increase of between 2% and 15% for IRB.
Brazil's largest banks , including state-run banks Banco do Brasil SA (BBAS3.BR) and Caixa Economica Federal , and private-sector peers Banco Bradesco SA (BBD) and Banco Itau Unibanco SA (ITUB) , will almost certainly gain day-to-day control of IRB after the privatization , according to analysts. IRB has a 40% market share in the re-insurance industry in Brazil.
The federal government , meanwhile , will hold a golden share in IRB. With the golden share , the government will keep a veto power over all key decisions , such as any eventual sale of control.
Currently , the government has a stake of 50% in IRB , while Bradesco has a 21% stake , Itau Unibanco holds a 15% stake and other small insurance companies a 14% stake.
The government said that it won't participate in the capital increase , paving the way for banks to increase their stake in IRB. IRB employees will be allowed to participate in the capital increase , along with the major banks.
"The process will provide IRB better conditions to compete in the re-insurance market , considering the new regulatory environment in which the IRB no longer enjoys exclusive rights over re-insurance ," the BNDES said in its statement.
IRB , created in 1939 , operated as Brazil's sole re-insurer until 2008 , when the government opened the local re-insurance market to private competitors.
Under the rules , the government said IRB will have a period of five years in which to list the company's shares. If the shares aren't listed by the end of that period , then the company's controllers will be obliged to buy back any and all shares acquired by employees. Employees can reserve IRB shares from Feb. 4 to Feb. 14.