Chile’s Grupo SMU has agreed to acquire control of smaller peer Supermercados del Sur from private equity firm Southern Cross, paying with 433.3m in new shares worth CLP1305.trn ($266m). SMU, controlled by conglomerate Grupo Saieh, did not release additional numbers for the privately held supermarket operator, and did not respond to requests or comment. SMU bought 81.3% of Supermaercados del Sur in the deal , according to Dealogic data. The transaction could boost SMU to second rung in the sector, says a Santiago-based retail analyst. Supermercados del Sur was reported in April to be eyeing an IPO, as was SMU, operator of the Unimarc chain.
Category: Daily Brief
Posted inDaily Brief
GeoPark Sells Down in Chile
LatAm E&P company GeoPark has agreed to sell a 10% stake in its Chilean business to Korea’s LG International for $78m in cash. The two are strategic partners since last year after acquiring a portfolio of upstream assets throughout Latin America. In May, LG paid $70m for a 10% stake in the Chile operation. The deal is expected to close in October.
Posted inDaily Brief
Mexico DCM Slowing Likely
Mexico’s domestic bond market could see issuance put on hold given continued market volatility, bankers say, with many waiting to see if a CFE transaction gets done today or tomorrow. “There is no clear sign but there is a possibility issuance may be delayed for another 2-3 weeks,” notes a Mexico-based banker. Last week, Pemex postponed issuance of up to MXP15bn ($1.14bn) in bonds because of poor market conditions. “Issuers may have the same mindset as Pemex,” notes a second banker. Mexican builder ICA and Mexican utility Comision Federal de Electricidad (CFE) both have plans to issue domestically this week, with CFE looking at a reopening its 2014 and 2020 bonds and Mexican builder ICA through two subsidiaries looking to issue up to MXP8.3bn ($632m) in asset backed bonds. “ICA and CFE are expected to issue to week but it has yet to be seen if it will happen,” notes a third banker. Mexico’s Banco Compartamos and Ford Credit de Mexico also have scheduled issuance for this week for up to MXP2bn and MXP1bn issuance respectively. Both issuances are floating rate bonds paying a spread over TIIE. “Everyone is waiting to see what will happen with CFE before deciding what to do next,” adds another banker. Bankers on the CFE deal expect pricing on Tuesday or Wednesday of this week. Mexican investors are keeping close tabs on US and European markets and are being selective. “There is tremendous risk aversion at the moment and we still remember Pemex and CFE bonds reaching 100bp over TIIE in 2008,” adds an investor.
Posted inDaily Brief
Moody’s Upgrades Globo
Moody’s has upgraded Brazilian media firm Globo to Baa2 from Baa3, with a stable outlook. The agency cites the company’s ability to diversify into higher margin content, greater transparency after its adoption of IFRS accounting standards and better corporate governance standards. The upgrade also reflects strong liquidity and a healthy debt amortization profile.
Posted inDaily Brief
Telemar Downsizes Revolver
Brazilian telecom Telemar is heard downsizing its 5-year revolver to $1bn from $1.5bn after bank meetings Monday. The smaller size arguably reflects a turning point for what had been an extremely attractive loan market for certain Brazilian and Mexican blue-chip names. This comes as banks take a more conservative approach at a time when events in Europe are clearly impacting funding costs. “The market has moved against the transaction,” a banker says. “A borrower of this caliber could have filled the book three or four months ago at the same price.” The Brazilian telecom may be considered a strong credit, but pricing levels on the revolver no longer reflect market conditions, and other borrowers may be faced with similar difficulties. “Going forward, pricing will be wider. The market is open and there is still liquidity, but there are fewer players,” says another banker. Telemar is one of a string of borrowers that came in the wake of Brazilian mining giant Vale’s $3bn 5-year revolver that offered a base margin of just 65bp over Libor and saw participation from over 20 banks in April. Conglomerate Votorantim followed suit with a $1.5bn 5-year senior revolving credit that offered Libor+85bp out of the box. Like Votorantim, Telemar’s revolver is tied to a leverage grid but offers Libor+90bp for the BBB/Baa2 credit. Bank of America Merrill Lynch, Citigroup and RBS are leads.
Posted inDaily Brief
Anhanguera Goes Large in Uniban Buy
Brazilian secondary education company Anhanguera Educacional Partipacoes has agreed to acquire peer Uniban for BRL510m ($286m), a larger-than-usual acquisition that allows it to pick up what analysts call one of the last large university players. The BRL382.6m paid for operations and BRL128m for three real estate assets is “slightly expensive,” Itau says, but notes the “scale, strategic fit and synergies justify the price.” Anhanguera bid about BRL6,900 per student for the 55,000 students the deal adds, an analyst at another shop says, a slight premium considering most deals in the sector come at BRL6,000 per student. It is not a surprising amount, though, as transactions in the past have gone as high as BRL8,000, he adds. The size of the transaction is up from its typical sub-BRL100m buy that Anhanguera and its peers engage in frequently as they drive to consolidate the country’s secondary education sector. “Consolidation is a major driver in the sector, and we continue to see Anhanguera as among the best positioned to come out on top, based on its superior, replicable model, its scale and its track record of acquisitions,” Itau says. With the deal, Anhanguera adds nine campuses in Sao Paulo and three others in states in the southern region. Analysts say the move makes Anhanguera the clear leader in Sao Paulo, though the university space still remains fragmented. Additionally, the buy allows the educator to execute on synergies including distance learning, which Uniban is authorized to implement, according to a company investor call Monday. It also indicated that it expects to slow its acquisition process for the next few months while it integrates Uniban and other deals it has executed over the past nine months. Anhanguera will pay BRL235m at closing and BRL285m within 24 months. It has been funding its acquisitions with proceeds from a BRL734m equity follow-on done in late 2010. The company declined to comment on any financial advisors used in the transaction.
Posted inDaily Brief
Banco Occidente Readies COP Bond
Colombia’s Banco de Occidente plans to sell domestic bonds Thursday, according to a banker managing the sale. The banker does not give the exact amount, though the issuance comes under a COP1trn ($545m) program and is likely to be in the range of COP300bn-400bn. The unit of Grupo Aval will be able to choose from 3-year bonds paying a fixed rate or a spread to the IBR rate, 5-year bonds paying a fixed rate or a spread to inflation, 7-year bonds paying a spread to inflation, and 10-year bonds paying a spread to inflation. Corficolombiana is managing the sale, rated AAA on a national scale.
Posted inDaily Brief
BBVA Colombia Sells Local Bond
BBVA Colombia has sold COP353bn ($192m) in domestic subordinated bonds, upsizing the transaction by COP53bn. A COP95bn 2018 tranche pays IPC+4.28%, a COP106bn 10-year tranche pays IPC+4.45%, and a COP152bn 15-year portion pays IPC+4.60%. BBVA led the deal, rated AAA on a national scale. Titularizadora Colombiana is set to follow Wednesday with a COP278bn RMBS offer, and Banco Occidente is expected Thursday.
Posted inDaily Brief
Canadian Miner Adds Mexican Project
Canadian gold producer Agnico-Eagle agreed to buy Mexico’s Grayd Resources in a deal valued at approximately CAD275m ($277m). The project is about 70km from Agnico-Eagle’s existing Pinos Altos operation, and could produce 92,000 ounces for nine years, says an analyst. David West, an analyst with Salman Partners, notes that the company, which is paying CAD 2.80 per share, a 65.7% premium to the average price for the 20-day period ending September 16, is in part paying for the exploration potential, making it hard to say at this point if the deal is fair value. “You’re paying for the exploration potential,” he says. “I think at the end of the day, you’re going to find that Agnico realized a good value in this acquisition,” he adds, highlighting the amenable mining location Mexico provides. He said he expects Mexico to remain a top area for mining activity. “It’s one of the better areas, period.” Agnico-Eagle retained TD Securities as its financial advisor, and Grayd was advised by Canaccord Genuity, and law firm Cassels Brock & Blackwell.
Posted inDaily Brief
CFE Eyes MXP Issuance
Mexico’s Comision Federal de Electricidad (CFE) is indicating pricing of TIIE +20-25bp for its retap of 2014 bonds, according to market participants. The state-owned electricity provider is reopening for the second time the domestic floating rate 2014 and fixed rate 2020 bonds, with pricing expected as soon as today or Wednesday. It does not yet indicate the amount. It originally sold the 2014 notes with a MXP5bn ($380m) size and the 2020s for another MXP9bn in December before reopening in January for MXP4bn each. The 2014 is a floating rate bond paying the TIIE plus 26bp, and was reopened in January at 100.338. The 2020 pays a fixed 7.96% coupon and was retapped at 97.808. CFE is raising the funds for general corporate purposes. Banamex, BBVA Bancomer and Ixe are managing the sale, rated AAA on a national scale.