Peruvian Prices Retail IPO

Intercorp’s InRetail Peru unit has priced a $460m IPO, with the oversubscribed deal landing just below the midpoint. The sale is Peru’s largest new equity issue in six years and offers equity investors their first real crack at the consumer demand side of one of LatAm’s fastest-growing economies. The unit holding Intercorp’s retail assets including InkaFarma drugstores and Plaza Vea supermarkets priced 23m shares, assuming the exercise of a 15% greenshoe, at $20.00 each, the company says, versus a $19.00-$22.00 range. The base deal represents a 20% float. Investor concerns about size, liquidity, and use of proceeds mostly for greenfield were outweighed by the issuer’s being part of one of Peru’s strongest corporate group’s and operating in a very attractive industry. “It is difficult to find a such a scalable play on Peru,” says an EM equity portfolio manager looking at the transaction. Investors reported using regional consumer stocks including Cencosud, BR Malls and the Intercorp parent as starting points for the pricing. The transaction was made up entirely of a 144A/RegS sale, a change from the original plan to include a tranche representing up to 5% of the offer for domestic investors in Peru. InRetail is raising funds for expansion in areas including supermarkets, pharmacies and commercial centers. BTG Pactual, Citi, JPMorgan and Morgan Stanley managed the transaction. It is Peru’s largest equity sale since Hochschild Mining’s $577m 2006 IPO, according to Dealogic data, and the second Peruvian IPO this year following Andino Investment’s $43m debut.