O IRB (IRBR3) reached its minimum history since IPO, held in 2017, with shares traded at the level of R$ 2.10. Some bad news, like the loss in April, raised market skepticism with the papers.
In addition, the reinsurer suffered from a crisis of confidence after the discovery of accounting fraud in early 2020, accumulating a devaluation of around 90% since then.
However, the largest individual investor on the stock exchange, Luis Barsiremains bullish on the stock.
In an interview with ReutersBarsi stated that the company is recovered, but needs a boost, which will be a capital increase.
“It’s like a locomotive, it’s on the track, but it doesn’t move, it needs fuel and the fuel is capitalization,” he said.
Last week, his youngest daughter, Louise, was elected to the reinsurer’s audit committee.
According to Great Investmentswhich has a sell recommendation for the share, with the subsequent losses, the IRB will likely need a new capital increase or debt issuance.
Alternatives to improve the capital structure include:
- structured operations that reduce provisions or other mechanisms for transferring portfolios in run-off;
- real estate sales;
- reduction of idle capital in subsidiaries;
- subordinated debt issuance; and
- share subscription, among others.
“All alternatives, in a way, harmful to the minority shareholder due to a possible dilution or a lower final profitability”, he adds.
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I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.