Arcos FO Seen this Week

Arcos Dorados is expected to price an equity follow-on as soon as this week, raising speculation that other strong issuers could also follow suit. Private equity stakeholders in the McDonald’s operator are taking advantage of the success and strong aftermarket performance of the $1.25bn April IPO to sell a to-be-determined amount of secondary shares. Some of the region’s better-known companies could also soon file follow-ons to ready themselves for the opening of any windows before year-end. IPOs, however, are another story and are unlikely to emerge until 2012, bankers say. Arcos Dorados filed with the SEC at the beginning of the month for a $50m deal, but that number is not binding and size is expected to be much larger. The sellers include funds linked to DLJ, Capital International and Gavea, which bought McDonald’s LatAm operations along with Arcos Dorados controller Woods Staton in 2007. Bank of America Merrill Lynch, Credit Suisse, Merrill Lynch, Citi, Itau, JPMorgan and Morgan Stanley are managing the Arcos follow-on sale. This is the same bank group that led the IPO – the region’s only IPO to price above its target range this year.