SAO PAULO/NEW YORK (Reuters) - OSX Brasil (OSXB3.SA), a Brazilian shipbuilding and oil services company owned by billionaire Eike Batista, doesn"t look like much on paper.
It owns one ship, the OSX1, which will be leased to another of Batista"s companies, plus land in southern Brazil where it plans to build a shipyard. OSX, which posted a 33.4 million reais loss last year, also owes 750 million reais of debt.
Yet if all goes as planned, OSX"s initial public offering, scheduled for next week, could raise up to 9.92 billion reais ($5.6 billion) in the second-biggest ever IPO in Brazil, and one of the largest in the world over the past year.
"Like other of Eike"s investments people are buying into the ability of Eike to build a business and finance a business that doesn"t exist today," said Scott Cutler, head of listings at NYSE Euronext.
Cutler, who just returned from a trip to Brazil to meet with potential IPO candidates, said interest in Latin America"s largest economy remains strong.
Batista, who made the biggest jump in the Forbes list of billionaires and ranks as the world"s eighth-richest person, made most of his wealth through the IPOs of his mining, oil, energy and logistics companies.
OSX Brasil is the latest and most audacious IPO yet hoping to benefit from investor bets on a global economic recovery.
Rising oil prices and soaring Chinese demand for commodities like iron ore and coal have triggered interest in a flotilla of ship-related IPOs in the Americas.
In the United States this week, two shipping companies -- dry bulk carrier Baltic Trading Ltd (BALT.N) and crude and fuel oil carrier Crude Carriers Corp (CRU.N) -- bet on increasing demand for basic goods and went public. A third company, oil and dry bulk carrier Alma Maritime Ltd (AAM.N), also filed for an IPO.
"I think it shows that investors are clearly focused on the global recovery. Another thing I think they"re thinking about in terms of maritime transportation is that they"re viewing this as a solid entry point to a sector that is at the bottom of its cycle," said Credit Suisse analyst Gregory Lewis.
FINDING A NICHE
The marine transport industry is growing across the container, bulk and oil sectors. But a potential surplus in shipping capacity remains a key factor in determining the pace and strength of the recovery.
Analysts forecast increased demand for dry bulk goods like iron ore from China and say oil prices should also trend upward.
There is space for new companies in the maritime transport sector, Connecticut-based Renaissance Capital analyst Matt Therian said.
"If you"re bullish on the sector, your alternative is going out and buying an existing company, which might have a lot of expensive legacy debt, or coming into a new vehicle," said Therian. "(Baltic and Crude Carriers) don"t have any debt to pay down so they can go after the spot market."
OSX has also carved out a niche. It is looking to benefit from an expected surge in demand for oil platforms, ships and services from OGX Petroleo e Gas Participacoes (OGXP3.SA), also controlled by Batista, state-run Petrobras (PETR4.SA) (PBR.N) and others seeking to tap Brazil"s vast deep-water oil wealth.
MADE IN BRAZIL
Brazil-based companies that win energy exploration concessions are obliged to source about 70 percent of their equipment and services domestically, Therian said. The requirement is to shield Brazil"s companies from more competitive shipping yards in Asia, he said.
OSX will price in Brazil on March 17 and begin trading on the Sao Paulo stock exchange on March 19.
The company plans to sell 5.51 million common shares, equivalent to a 40.4 percent stake, at a price range of 1,000 reais to 1,333.33 reais. The offering might increase by 1.93 million shares if underwriters, led by Credit Suisse, exercise their option to sell additional stock to meet demand, valuing the IPO at as much as 9.92 billion reais.
Despite Batista"s Midas touch reputation, OSX has no revenue. It has signed an agreement to lease the OSX1 vessel to Batista"s oil company OGX and expects to lease another 47 units to the company over the next 10 years.
(Reporting by Clare Baldwin in New York and Elzio Barreto in Sao Paulo; Additional reporting by Jonathan Saul in London, Alison Leung in Hong Kong and Robert Gibbons in New York; Editing by Gary Hill)
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