Hedge Fund Sees Casino's Brazil Unit GPA Trading at a Discount

(Bloomberg) -- Shares of Cia. Brasileira de Distribuicao still look cheap after posting their best week since September, according to Ibiuna Investimentos, which has about 6 billion reais ($1.6 billion) in assets under management.

The Brazilian retailer, more commonly known as Grupo Pao de Acucar, or GPA, rebounded in Sao Paulo last week following the announcement of a reorganization proposal that would lead to the simplification of its parent company Casino Guichard-Perrachon SA’s structure in Latin America.

“Our initial analysis of the proposal is pretty positive,” according to a monthly note from Ibiuna. ”We’re still quite positive on the firm’s investment thesis, as it still has a relevant discount to other Brazilian assets.”

GPA proposed a public offering to acquire all of Colombia’s Almacenes Exito SA shares and recommended it transfer to the Brazil stock exchange’s Novo Mercado segment, which lists Brazilian companies with higher corporate governance standards. The migration "will ease investors’ concerns about GPA’s corporate governance,” Bradesco BBI analysts led by Richard Cathcart wrote in a report last week.

In mid-June, GPA also sold a 36% stake in Via Varejo SA, a Brazilian electronics retailer it had been trying to sell since 2016.

To contact the reporter on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Scott Schnipper

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