General Atlantic already has 11% of Locaweb’s capital (LWSA3)
Private equity manager bought almost 6% of the company’s capital at auction on the stock exchange yesterday
General Atlantic built a position of almost 11% in Locaweb. The company’s share (LWSA3), as one of the main Brazilian representatives of the tech wave, has suffered a lot on the stock market in recent months. The information is contained in the Locaweb reference form, recently updated by the Securities and Exchange Commission (CVM) due to the auction held yesterday.
More than 5% of the company’s capital changed hands yesterday on the stock exchange, but the seller remains mysterious. The initial auction had 27 million shares, or 4.9% of the capital (below the mandatory limit for disclosure of information), but it grew with market interference and reached almost 35 million shares – almost 6% of the company. The price was BRL 7. The founders, who together hold about 27% of Locaweb, did not sell their positions, nor did the two largest known investors BlackRock (9.66%) and William Blair Investment (5.20%). .
After being worth more than R$ 20 billion on B3 (R$ 35 per share), at its peak reached in February last year, the company is currently valued at R$ 4 billion. The number equates to less than 4 times the projected net revenue for the year and is 2.5 times cash. The company has no debt and at the end of March it had R$ 1.5 billion invested in the bank. In practice, it is as if the business itself, with its future cash flow, was valued at R$ 2.5 billion.
In the year, until the end of March, the company rehearsed a recovery and the share was traded at R$ 10.50. However, it did not resist the tech flight that hit the market, with investors’ aversion to the theses of high growth and high demand for capital in the technology sector, and it fell sharply again in the most recent trading sessions.
In the tech breakout, there is not a problem with the industry from a business strategy point of view. The issue for investors is that, in general, the return perspective of these companies is in a more distant future. The increase in interest rates, in this environment in which there is no clarity on how Central Banks will behave around the world in the face of the drama of inflation, has made money flow to businesses with present value, fixed assets and dividend payers.