SAO PAULO â€" Tiger Global Management will invest nearly $520 million in Brazilian online retailer B2W Companhia Digital, the company said, a sign that the New York-based hedge fund continues to see promise in Brazil’s vibrant Internet sector.
Shares of publicly traded B2W jumped 41.41 percent on Monday, to close the day at 21.92 reis.
The company said in a regulatory filing late Friday that its board had approved a capital increase of as much as 2.38 billion reis to come from both Tiger and the company’s controlling shareholder, Lojas Americanas S.A., which currently owns 62.23 percent of the company.
The two firms will purchase as many as 95.2 million shares, priced at 25 reis a share. Tiger will provide at least 459.2 million reis but as much as 1.2 billion reis, while Lojas Americanas will provide at least 1.02 billion reis, the filing said.
The terms represent a premium of 61.3 percent based on Friday’s closing stock price of Reais 15.50.
Lojas Americanas is controlled by Brazilian billionaire Jorge Paulo Lemann and his partners, Marcel Telles and Carlos Alberto Sicupira. It is expected to still maintain control of B2W once the transaction is completed.
For Tiger, the investment suggests rejuvenated interest in Brazil’s e-commerce sector. It also invested in the online travel agency Despegar, based in Buenos Aires, but with a strong presence in Brazil, where it is named Decolar. Tiger continues to be the controlling shareholder.
Subsequently the firm also made several investments in Brazilian e-commerce companies, including Netshoes which it controls.
Some like NetMovies Entretenimento did not work out. Tiger bought that company from Rio de Janeiro-based venture capital firm Ideaisnet in 2010 hoping it could beat Netflix which was arriving in the region. But NetMovies failed to do so.
For B2W, the new capital could help it overcome difficulties it has faced in recent years including a tough competitor in Nova Pontocom. But it has shown some signs of improvement. In the third quarter of 2013, B2W posted a net loss of 38.6 million reis, compared with a net loss of 45.2 million reis in the third quarter a year earlier.
The transaction requires approval from CADE, Brazil’s anti-trust regulator and B2W shareholders.
