Big foreign investors in Brazil are urging stock exchange intervention to halt a deal that would merge two of the country’s low-cost housebuilders.
Fifteen investment institutions from North America and Europe led by F&C have written to São Paulo’s Bovespa stock exchange about the proposed purchase by Gafisa of a controlling stake in Construtora Tenda.
The institutions object to the structure of the deal, involving a large issue of Tenda shares to Gafisa.
In exchange, Tenda will merge with a Gafisa subsidiary that also builds low-cost houses, Fit Residencial Empreendimentos.
Urban Larson, a director in F&C’s emerging equities team, said yesterday that investors had received no independent valuation of Fit.
'It looks like a high valuation,' he said.