“You have to believe in the turnaround story and, on a more macro view, you have to believe in the housing recovery,” noted one Brazilian banker. “I think management played very well.”

Joint bookrunners Credit Suisse, BBI, HSBC and Santander relied on a few late orders by institutions to anchor demand on a deal originally sized at 70m shares. Interest in the offering, which was two-times covered on the base, allowed for an increase in deal size to 87.5m shares at R$3.20, versus a last sale price of R$3.35 and 8% below pre-launch levels.

Paladin Realty Partners, the homebuilder’s largest shareholder, agreed to invest an additional R$50m, about 17.8% of the deal, on the offering. Paladin and Inpar’s founding shareholders saw their combined stake diluted to about 55%, from 70%. “Inpar managed to attract a financial engineer, and a good one at that,” said one LatAm banker of the R$180m that Paladin invested in early 2008.

Inpar, which focuses on low- to mid-income housing, used the bulk of cash raised on R$750m IPO in 2007 to acquire land. When the credit markets collapsed in 2008, however, it was unable to access the capital markets for financing to develop. With few other choices, the company’s founding shareholders agreed to sell to Paladin in an effort to restructure the business.

In the second half of 2008, the homebuilder undertook restructuring initiatives that saw it divest non-core holdings and postpone new constructions in an effort to preserve cash. As part of the process, Paladin was able to convince lenders to extend additional credit, contingent upon an equity raise. The agreement provides access to an incremental R$300m, on top of the R$250m already available.

Inpar’s still sizable land bank is worth about R$11.6bn, about one-third of which is short-term developments. The value of the land holdings, which are concentrated Espirito Santo, Brazil’s third-largest city, was one of the primary factors that attracted investor interest. Inpar shares trade at about 0.9-times book value, a steep discount to the 2- to 2.5-times of more established homebuilders.

The suggestion of G7 pressure on the pair to ensure faith in sovereign credits remains is interesting, but the redemption of the bonds does not mean we are back in the situation before the standstill in late November. 

The investors getting paid today are not the ones that were holding the bonds two weeks earlier.

Many fund managers, once the standstill was ann0unced, made the rational decision to sell as soon as possible and realise what they could. They left it to those more used to restructurings to take a punt on the likely outcome. It is these distressed investors that today are banking a quick profit.

So come the next sovereign or quasi-sovereign issue from Dubai, the investors approached to buy may still have made significant losses on ‘Nakhell’.