Chilean health-care provide Cruz Blanca has priced a CLP111.0bn ($234m) IPO below its floor price, raising less than the $250m anticipated by the market. The 122m primary and 100m secondary share sale priced at CLP500 each, with the issuer opting to come below the CLP525 minimum floor that it had set earlier. Analysts had recommended buying at up to CLP550-CLP600, well above the CLP497.81 closing price on the first day of trading. Total demand came in at CLP444.9bn from 1,348 orders. Retail accounted for 14% of demand, 4.5% went to employees and others linked to Cruz Blanca, with the remainder going to Chilean and international non-retail investors. The sale adds diversity to Chile’s health sector, seen as a play on growth and rising incomes, with spending in the sector expected to double in the next 10 years. Sixty five percent of the proceeds are slated for investments as the company looks to grow through acquisitions and organically. It has plans to open new locations for its Integramedica walk-in clinics as well as renovate its 3 brands of medical centers. The other 35% will go to repay debt. Bice, Celfin and IMTrust managed the sale. The issuer, owned by Grupo Said and Linzor Capital, was founded in 1999, though the Cruz Blanca brand was created in 2008 with the acquisition of health insurer Isapre ING. The health insurance operations represent 74% of Cruz Blanca’s business. Cruz Blanca claims 20% of the market in Chile, covering 530,000 people.
Category: Chile
Cruz Blanca Set for IPO
Chile’s Cruz Blanca is set to announce pricing today on its IPO and could raise more than $250m. Market expectations are for a CLP550-CLP600 per share price for the sale of 122m in primary shares and up to 100m in secondary shares, implying a size of anywhere between CLP122.1bn-133.2bn ($258m-$281m). Local brokerage Security sees health-care spending doubling over the next 10 years and recommends buying the IPO at CLP560 with a 12-month target of CLP700. The health services provider has been marketing in LatAm, the US and UK, as it prepares to float up to 35% of the company. It follows pharmaceutical company CF Recalcine, which raised $368m equivalent last month, adding some sorely needed diversity to Chile’s equity market. Like Recalcine, Cruz Blanca is an expansion play, with 65% of proceeds slated for investments. The company is looking to grow through acquisitions and organically and has plans to open new locations for its Integramedica walk-in clinics as well as renovate its 3 brands of medical centers. The other 35% would be used to repay debt. Bice, Celfin and IMTrust are managing the sale. The issuer, owned by Grupo Said and Linzor Capital, was founded in 1999, though the Cruz Blanca brand was created in 2008 with the acquisition of health insurer Isapre ING. The health insurance operations represent 74% of Cruz Blanca’s business, according to the prospectus. Its total 2010 Ebitda was $31.2m equivalent. Cruz Blanca claims 20% of the market in Chile, covering 530,000 people, according to its website.
La Polar Lowers Capital Raise
Chile’s La Polar reduced the amount of capital it will look to raise in the wake of a scandal over unauthorized lending practices that saw another 11 executives sacked this week. La Polar will now seek to raise CLP100bn ($212m), about half the $400m it was expected to authorize. It also intends to ask bondholders to waive bond payment acceleration and default covenants in a meeting June 29. La Polar and financial adviser LarrainVial are also working on a proposal to extend maturities of bank loans.
Chile CenBank Raises Growth Estimate
Chile’s central bank raised its growth estimate for GDP to 6.0%-7.0% from 5.5%-6.5%, with domestic demand expected to expand 8.5%, up from 7.6%. The revision stems primarily from the economy’s stronger performance in the first quarter. For the rest of the year, the pace of expansion of total activity and demand will moderate as forecast in March, according to the central bank. In particular, the speed of growth in the GDP of sectors other than natural resources will quickly approach the trend rate, which is still estimated at 5%.
Chile’s BCI Heads to Mexican DCM
Chile’s Banco de Credito e Inversiones (BCI) is looking to issue up to MXP3bn ($250m) in 5-year floating rate bonds in Mexico, becoming the second-ever Chilean borrower to try its luck in Mexico’s DCM. Investor meetings should start in the next few weeks, with pricing expected by the end of July, says a banker on the transaction. The borrower has decided to come to the Mexican market to diversify its investor base and because it considers Mexico to be a country with a deep investor pool, the banker adds. Domestic accounts welcome the debut issuer, but they will require more time to analyze an unfamiliar credit from abroad. “In general terms it is a good name, and we like the credit risk,” says one asset manager. “But we will need to do more analysis than we usually do compared to a bond by a local name, and a lot of follow-up needs to be done on country risk,” he adds. Still, an investment-grade credit such as BCI will be welcomed in a market that offers investors few chances to diversify away from the handful blue-chip names that populate Mexico’s DCM. “This sort of AA rated issuer from another country is very good for the portfolio, and we would definitely welcome more opportunities to diversify our investments with credits from other countries,” says a second investor. A third member of the local buyside adds that while in principal he considers BCI an attractive name, the pricing would determine whether he would buy the paper. The company has not specified whether it will swap the currency yet, but with only one representative office in Mexico and no other operations in the country, it is likely to revert to either USD or CLP. Proceeds are for general corporate purposes. HSBC is managing the sale, rated AAA on a national scale. BCI would follow Chilean mining company Molymet, which has mining operations in Mexico and has done three MXP bond issuances. The last was in April, for MXP1.5bn in 1.5-year bonds priced at TIIE+ 55bp. In the most recent AAA bank bond dea
La Polar Seeks Covenant Waiver, Share Issue
Chile’s la Polar plans to raise $400m equivalent from the sale of new shares and ask bondholders to waive covenants after loan-loss provision estimates rose to CLP538bn ($1.14bn). The retailer had forecasted earlier this month a loan-loss provision of about CLP200bn after irregularities were detected at its consumer credit business, resulting in the firing and reshuffling of officials. La Polar will ask shareholders for the sale of $400m in new shares in a meeting Wednesday, a capital increase that was originally to go towards expansion plans. It also intends to ask bondholders to waive bond payment acceleration and default covenants in a meeting June 29. La Polar and financial adviser Larrain Vial are also working on a proposal to extend maturities of bank loans.
Quinenco Returns after 6-Year Absence
Chilean business conglomerate Quinenco, the holding company of Grupo Luksic, is preparing to issue in the Chilean bond market next week, marking its first domestic offering in about 6 years, says a lead banker. It is looking to raise up to UF7m ($322m) through a dual-tranche 7-year and 21-year offering. Proceeds will be used for payment of existing debt, to finance investments and other corporate purposes. Banchile and BBVA are leads. With a $42bn portfolio, Luksic controls Banchile and brewer CCU, and holds positions in shipper Vapores and manufacturer Madeco.
Cencosud Prints First 20-Year Fixed-Rate
Chilean retailer Cencosud has issued a CLP54bn ($115m) 2031, marking the first 20-year fixed-rate bond to come from a corporate in the local market, according to a banker on the deal. The bonds priced at 95.91 with a 7.00% coupon to yield 7.40% after generating over a CLP100bn in demand mostly among pension funds, insurance companies, mutual funds and private banks. Tenors on domestic fixed-rate paper issuance typically don’t stretch out beyond 10 years, with issuers using UF-denominated bonds to reach the longer points along the curve. Proceeds will be used for investment and refinancing purposes. Celfin and EuroAmerica were the bookrunners on the deal, rated AA on a national scale. Cencosud made its dollar debut in January, when it raised $750m in 2021 bonds.
Sodimac to Issue Local Bonds
Sodimac, the home improvement unit of Chilean retailer Falabella, is looking to issue UF4.5m ($161m) in a dual-tranche local bond transaction. It wants to sell UF3m in 10-year notes and UF1.5m in 30-year paper. The date of the issuance has not yet been determined, according to a lead banker. Banco de Chile is managing the sale. Falabella’s mall operator, Mall Plaza, came to the market last week with a UF3.5m transaction. Falabella told LatinFinance in February that it was considering issuing around $500m in local currency bonds in Chile, Argentina, Peru and Colombia to finance its investment plans for the next 5 years. It plans to invest up to $3.5bn and open 215 stores and 16 shopping malls.
Aguas Shares Dip After $1bn Sale
Aguas Andinas stock ended lower on Wednesday after Chilean government entity Corporacion de Fomento de la Produccion (Corfo) raised $979m equivalent through the sale of shares in the water utility. The transaction represented 30% of Aguas Andinas and involved the sale of 1.83bn shares at CLP250 per share, raising CLP457.5bn ($979m). The price came at a 3.8% discount to Tuesday’s CLP260 close before the company’s shares dropped to CLP248.17 Wednesday. Demand reached CLP873.5bn with 14% of the sale going to domestic retail accounts and the remainder to domestic institutional and international buyers. The government keeps a 5 % stake in Andinas, including class B shares that allow it to retain certain veto powers in major decisions going forward. Corfo had initially planned to sell all of its 35% (2.14bn shares) position, but adjusted that amount to 30% during the period leading up to the sale. Banchile, Bank of America Merrill Lynch and IM Trust led. Andinas is 50.1% owned by the Inversiones Aguas Metropolitanas (IAM) vehicle, which is in turn 56.6% owned by Spanish water utility Agbar, which is controlled 75% by France’s GDF Suez. Privatized in 1999, Andinas provides waste and water services in Chile through six subsidiaries. The government got approval late last year for the sale in order to raise funds for use at other state-owned enterprises. It follows January’s $1bn sale of 40% of utility E.CL and is part the government’s plan to meet increased financing needs through asset sales following last year’s earthquake.