Brazil's Localiza launches $935.5 million share offering to expand fleet

SAO PAULO (Reuters) - Brazilian car rental company Localiza said on Friday it will launch a follow-on share offering aimed at raising as much as 4.5 billion reais ($935.51 million) to expand its car fleet and service network.

The primary offering will initially comprise 60.02 million new shares, Localiza said in a securities filing, but could be increased by up to 12.5% if demand allows it.

Considering its closing price of 66.64 reais per share on Thursday, the offering would total around 4 billion reais, the company said. If the overallotment is fully sold, that amount would reach some 4.5 billion, it added.

That money would be enough for the company to add up to 50,000 new cars to its fleet, analysts at JPMorgan estimated, after purchasing a total 48,161 vehicles in the first quarter of 2023.

"We remain 'Overweight' on Localiza (as) we continue to like the rental space on the back of compelling growth potential and the benefit of lower interest rates," the analysts said in a note to clients.

Shares of Localiza slipped around 2% after the move was announced, making it one of the biggest fallers on Brazil's Bovespa stock index. They were still up nearly 25% so far this year.

Itau BBA, Bradesco BBI, BTG Pactual, UBS Brasil, Santander Brasil, Bank of America, Banco Safra and XP Investimentos are managing the offering, which is expected to be priced on June 26.

($1 = 4.8102 reais)

(Reporting by Gabriel Araujo; Editing by Steven Grattan, Louise Heavens and Conor Humphries)