Oi raises $3.7 billion ahead of Portugal Telecom merger

Brazilian operator Oi has raised an estimated $3.7 billion (R$8.25 billion) in a follow-on share sale, ahead of its merger with Portugal Telecom, Bloomberg reports.

In a statement yesterday, the company said that it had raised R$8.25 billion by pricing its preferred shares at R$2 ($0.89) per share.

“The offering was registered in Brazil with placement efforts abroad, including a registered offering in the US,” a statement from Oi said.

Oi is preparing for a merger with Portugal Telecom, and had aimed to reach R$8 billion in total funding to help pay off the debt of its controlling shareholder, Telemar Participacoes.

According to people with knowledge of the matter, Grupo BTG Pactual raised a R$2-billion fund and acted as lead bank for the transaction.

“The transaction is a big statement for potential initial public offerings and equity offerings in Brazil – the deal has clearly reopened the market,” said one banker.

13 other banks were involved, including four global co-ordinators; Bank of America Corp’s Merrill Lynch, Barclays, Banco Espirito Santo and Credit Suisse Group.

According to data from Reuters, this is the first IPO or follow-on share sale in Brazil since December 2013.