A real estate building company that plans a R$2billion IPO in the middle of a pandemicEXAME - 29/05/2020
Dr. Emílio Kallas, the founder of the real estate building and development group that bears his name is ready, just waiting for the green light from his financial advisors to start the procedures for his business to open capital. Actually, he was ready, but then the Covid-19 pandemic came up and turned everything upside down - health, the economy, the market.
Kallas, who is an engineer and cousin of the doctor Esper Kallas, told EXAME IN that he plans to raise R$2 billion for the company's cash flow. The goal is expansion. "I'll prepare the company for this. Today, I can just reach about 20% out of the total we could do," he says, explaining why he wants to access the market, 37 years after the foundation of his business. "I have no corporate debts. Only the constructions'. The upcoming money is all for growth."
"Everything was ready for us to go public in May, but then coronavirus came up. I believe it's possible to do it in the second semester." The leading banks coordinating the process are Credit Suisse and Itaú BBA. Safra, Banco do Brasil and Caixa are also taking part on the operation.
The market value of the companies has been recovering slowly - surprisingly, even for many resource managers. And the movement has gained strength over the last few days. Today, Bovespa Index has reached its highest value since March 11th. At the end of that month, the capitalization of the companies that make up the index totalized R$2.55 trillion and is now above R$3 trillion. In the last few days, there were signs of a positive flow of foreign investors on the stock market and the construction segment was among those elected.
If the offer market reheats, it will be necessary to test it for the construction sector and whether Kallas will take its share. The segment was one of the most agitated for IPO this year, which promised to break all the operating records. From the list of IPO processes under analysis at the Brazilian Securities and Exchange Commission (CVM), seven out of the 18 listed companies are from the real estate development and construction sector and Kallas was not among them yet.
Kallas Real Estate Development and Construction Group has currently four types of business - low, middle and high-income construction and development, third-party construction, land subdivision development and sales. "I'll list the holding company, so that it will avoid any conflict risk among the companies and the investors can support me in the structure."
The pandemic has not only affected the IPO plan, but sales as well. Launches that were supposed to happen this year by Kallas totalized a potential sales value (PSV) of R$ 2.6 billion - R$ 1.5 billion of products for low income and almost R$1.1 billion for middle and high-income projects. However, the estimates were reduced to a total of R$1.75 billion - R$1 billion in low-income and R$750 million in middle and high-standard projects.
"We're going to follow the scenario to see if a new cut in expectations is necessary," said Kallas, who is also the president of the holding. But being as optimistic as possible, the founder believes in a resumption from the beginning of the second half. "We're proceeding with our projects. I'm also working on the showroom launches, in order to have them ready when everything gets back to a more normal way," he said.
Kallas, who is the vice-president of São Paulo's Housing Union (Secovi), said that in March the pandemic got ??only a part of sales: it was possible to do 75% of what was expected. In April, this percentage fell to an interval between 20% and 30% of the forecast for the year. In May, the numbers were already showing a smooth recovery, closer to 25% to 30%.
For Kallas Group, if Doctor Emílio manages to achieve the target set by Covid-19, of 1.75 billion launches, it will be quite a growth: more than double than last years' 800 million, which was still a more conservative period for builders and developers. The companies were prepared for an awesome year as it hadn't been seen for so long, including Kallas. He says it was in the construction companies crisis - after the eagerness of the sector capital openings of 2007 and 2008 - that the group grew up. "I was buying land slowly, when everyone was in a more delicate situation. Many companies suffered because they were not prepared to go public.
So.today it has a bank of 50 lots. The resources of the intended IPO will accelerate the company's ability to operate, build and develop in these areas. Today, it has already developed projects totalizing R$ 5billion, which may be launched this year and the coming two ones.
In the new projects, there will be traces left by post covid-19 behavior changes. "The projects will incorporate a space for home-office in middle and high-income projects. Before that, the office was a little room that was left in the house. It will not be like this anymore. There will also be an area for deliveries and market purchases" he mentioned. In smaller enterprises, there will be a collective space for work.
At 69, Kallas likes to say that in addition to everything that is ready, the list the investors like to check on for an IPO, also comes with a succession plan. His two sons are engineers, with international courses attended, and each one runs a different segment: while one takes care of low-income projects the other is responsible for middle and high-income developments.