Tourism company Brasil Travel Turismo and its shareholders dropped plans to sell shares in an initial public offering, International Financing Review said, in what could be seen as a chilly start to the year for share offerings in Latin America's largest economy.

The plan, in which the São Paulo-based company originally aimed to raise BRR1.45 billion reais (USD$842 million), floundered due to lack of investor demand, IFR said on Thursday, citing sources with knowledge of the situation.

The Brasil Travel deal could have been the first IPO in Brazil this year. Its failure signals that investors, who last year steered clear of local IPOs as Europe's debt crisis worsened, will keep shunning companies with great ambitions but an insufficient track record, poor earnings visibility or that could be vulnerable to a downturn.

Brasil Travel hired the investment banking units of Credit Suisse Group, Barclays, Flow Corretora and Banco Santander to manage the IPO.

Market sources said on Thursday that bankers considered reducing the suggested price tag to BRR850 reais a share to secure demand, and allowing existing shareholders to buy up to 50 percent of the offering, up from an initial 15 percent threshold.

Brasil Travel on Wednesday cut the suggested price per share to BRR1,000 reais (USD$578) from a prior range of 1,250 reais to 1,650 reais. The company, the by-product of about 35 mergers, and shareholders said in a securities filing last month that they planned to offer up to 878,255 common shares.

NEXT WINDOW

According to the IFR, the next window for a possible offering by Brasil Travel could be early spring. No new date for the IPO has been set yet, IFR said.

The company, which describes itself as Latin America's largest travel operator by sales volume, sells airline tickets, hotel reservations and foreign exchange services.

According to its IPO prospectus, sales reached BRR316 million reais in the first nine months of last year, compared with 250 million reais in the same period of 2010.

With proceeds from the IPO, Brasil Travel were create a single online sales platform, boost points of sale and offer more products under its Stella Barros and Vaivoando tourism agency brands.

Among shareholders of the tourism company are an investment vehicle controlled by Rio de Janeiro-based consultancy firm Dalty Assessoria, Banco Modal, and the founding partners of the 35 companies that merged to create Brasil Travel.