The TCM unit of Controladora Comerical Mexicana has extended the deadline for a local bond exchange offer by 20 days to March 2, in order to complete registration. The retailer seeks to extend its maturity profile as it recovers from crisis-related derivative problems. It is offering holders up to MXP1.5bn in new 2016 notes in exchange for 5 series of outstanding bonds with nearer maturities. The new bonds are rated BB on a national scale and should be issued following close of the offer. Comerci has not indicated the acceptance rate to this point. Ixe is managing the transaction.
Category: Daily Brief
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Nexxus Tees Up Fourth PE Fund
Mexican private equity investor Nexxus Capital is getting ready to raise money for a fourth fund. It plans to raise $220m-$280m through the issuance of CCDs in mid-February and another $100m-$150m from international investors a few months later. “We want to invest in companies that offer products and services to the lower and middle classes in Mexico,” senior MD Luis Harvey tells LatinFinance. He adds that fundraising should take 6-7 months. Nexxus is also eyeing some exits from stakes acquired through its other 3 funds. For instance, it is considering listing locally a 16% stake in pharmaceutical company Genomma Lab, of which it bought 30% in 2004. The 16% chunk is worth about $180m, says Harvey. “By 2011 we expect to have sold off the entire stake,” he explains. He expects to stay on the company’s board. Nexxus has slowly been selling down participation in Genomma through the local exchange since 2008. Other companies Nexxus owns that it float in Mexico are Credito Real, which could happen in 2 years, and education company Harmon Hall. “We will grow [the latter] company, in which we hold a 60% stake, for the next 3 or 4 years and if it reaches a certain size we may also take it public,” Harvey explains. The shop could also exit Mexican gym chain Sports World, which it bought in 2005. Harvey thinks the company is worth $60m-$65m. Meanwhile, the $13m left over from a third fund will be reinvested in portfolio companies, he adds. Nexxus could invest in 2-3 laboratories and merge them into Laboratorios TJ Oriard, which will soon be renamed Diagnosticos de Mexico. Nexxus bought that firm in late 2009. Harvey says Nexxus also sees opportunities to purchase distressed hotels in Mexico. Nexxus recently purchased 6 hotels containing 2,200 rooms from Spain’s NH Hotels. Nexxus’ senior MD Arturo Saval says the third fund is returning around 3.2x-3.3x of funds raised and that the previous vehicles’ returns are around 2.8x. Saval is also confident he will see investors who part
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Peru Fishery Casts Off For Debut Bond
Peru’s Corporacion Pesquera Inca (Copeinca) is set to begin marketing Wednesday a $150m bond that would be its first in the international markets. The fishery will visit Asia, the US and Europe this week and next, and is looking at a 7-year deal, according to a banker on the transaction. Credit Suisse and Santander are managing the sale. Copeinca plans to use proceeds for repaying debt. In a report assigning a BB minus rating, Fitch notes Copeinca’s strong market position, adequate leverage levels, and positive free cash flow generation. As of September, the net debt/Ebitda ratio was 2.1x, down from 2.4x in 2008. LTM Ebitda was $63.0m and total debt was $152.2m, composed mostly of a $135m syndicated loan. Fitch notes that the rating is constrained by product and client concentration, vulnerability to weather changes, price volatility and an aggressive growth strategy. Copeinca is expected to continue with its growth strategy and to manage to its leverage ratio target in the range of 2.0x to 2.5x, adds Fitch. Copeinca has become the third largest producer of fishmeal in the world and second largest in Peru, Fitch says, on the back of nearly $400m in acquisitions in the past few years. It borrowed $185m in 2007 through a 5-year loan arranged by Credit Suisse, BBVA, WestLB and Glitnir. “The proposed $150m notes issuance will increase the company’s financial flexibility as it extends its maturity profile to 7 years. Also, the company continues to have access to the local capital markets supported by its fishing licenses,” adds the agency.
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BA Eyes Second Tap
After a quiet $50m placement in December, the City of Buenos Aires is preparing to meet bond investors with the aim of adding to its international borrowing. Meetings begin Friday in London and will hit the US next week, with a transaction possibly to follow. The Reg S private placement just before Christmas of 12.5% coupon 2014 amortizing notes was far less than the $250m the B2/B minus issuer had planned to raise, so a return tap this year for up to $200m had been expected. Credit Suisse, manger of the December sale, is running the new show. The federal government rejected an attempt to raise $500m in 2008 through Barclays, Citi, and Banco Macro, and the city finally came to the markets last year after negotiating a change to the law that prohibits it from issuing debt internationally without federal approval.
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Investors Picky on Brazil Equity Issuance
Despite the selloff that has seen the Ibovespa sink 5.2% in the past 4 sessions, equity investors have started 2010 with a favorable, albeit cautious, view on Brazil. Three US-based portfolio managers say they are overweight stocks in the biggest LatAm economy, having either maintained or increased allocation. However, appetite is uncertain for the 3 deals slated to price in the coming 7 sessions, including an IPO. “It’s going to be company-specific, and whatever I buy will have to be better than what I’m holding now,” says Todd McClone, who oversees $6bn LatAm equity for William Blair & Co. A concern for McClone is the abundance of paper coming from certain sectors, including homebuilding. Follow-ons scheduled include Inpar and PDG Realty, both specializing in homebuilding. The IPO is for Aliansce Shopping, the mall operator that kicks off the season with an up to BRL1bn deal Wednesday via Itau BBA and BTG Pactual. March 2, TAM miles program Multiplus is scheduled to price an IPO worth over BRL1bn. Will Landers, who manages over $7bn in LatAm equities at BlackRock, says his preference is for a minimum deal size of $300m-$500m. He also likes sectors that are under-represented in the Bovespa, including those with businesses tied to infrastructure or that can benefit from growth expected from the Olympics and World Cup. Foodmaker M. Dias Branco pulled a small offering scheduled for February 4, while Metalfrio, which was set to bring a similarly-sized deal, is also heard mulling withdrawal.
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Itau Foresees Private Bank Surge
Itau Unibanco, owner of Brazil’s largest private banking network by assets under management (AUM), is plowing ahead with expansion, says CEO Celso Scaramuzza. “We expect the growth rate for the private banking market [by AUM] in Brazil this year to be 20%,” he says. The banker notes that a real increase of around 10% is on par with some of the world’s fastest expanding private banking markets, like China. With AUM of around BRL100bn equivalent and a 34% share of the Brazilian pie, according to ANBIMA, Itau Unibanco is focused on building out the domestic business further. A new area is managing money for families and shareholders that own significant or controlling stakes in Brazilian firms. Advisory products include liquidity event and strategic capital structure management, often done in conjunction with investment banking arm Itau BBA, says Scaramuzza. Among recent hires for the effort is Andrea Brandao, formerly of RBC’s Sao Paulo-based private bank, who will be a senior private banker for Itau. “We are growing the team and there will be more hires this year,” notes the executive. The bank is also looking to develop more elaborate investment products, both in fixed income, equity and structured finance, which can include a combination of assets. “We are seeing a higher demand for equity funds in Brazil,” adds Scaramuzza. Itau is also building its overseas network. With a pending license to operate in Zurich, the bank will have 3 non-LatAm main offices, including Miami and Luxembourg. In the region, units in Chile, Argentina, Paraguay and Uruguay complement the bank’s retail presence in those countries. Broadly speaking, says the CEO, competition in wealth management and private bank is growing significantly in Brazil. Goldman Sachs, for one, has recently built a large new Sao Paulo-based wealth management team targeting high and ultra-high net worth individuals. BTG Pactual and Credit Suisse are meanwhile competing head to head for the number 2 slot, with close
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Pacific Rubiales Wraps Up Warrants
Pacific Rubiales has completed a warrant exchange offer that has raised $258m. The Canada-based oil and gas producer with Colombian assets claims a 97.8% participation rate after the close of the offer period Wednesday. It will automatically convert the remainder of outstanding securities that date back to the 2007 financing of the acquisitions of Meta and Petro Rubiales. Pacific Rubiales offered investors 1 share and C$0.75 cash for each warrant, at an exercise price of C$7.80, or C$6.30 for holders accepting before a January 13 early date, in the offer launched December 14. Proceeds will finance capex, a spokeswoman says. GMP Securities and RBC Dominion advised Pacific Rubiales.
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Eletrobras Coughs Up Overdue Dividends
After much speculation and anticipation by investors, Eletrobras has arrived at plan to distribute accumulated overdue dividends between 1979 and 1998. The total sum, to be paid out in 4 installments, is BRL10.3bn. Nearly all of it is owed to holders of ordinary shares. Holders of Eletrobras stock as of January 29 will be entitled to receive their share of dividends. Ordinary shares of Eletrobras rose 10.9% to BRL4.15 Friday on the news. Bloomberg reports that the company will sell up to $4bn in bonds to fund investment and hedge dollar debt, citing CEO Jose Muniz.
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GEM Equity Hits Inflow Stride
GEM equity funds absorbed $748m in the week ended January 20, their 11th consecutive week of inflows, according to EPFR Global. The shop adds that in the same period, LatAm funds raked in $230m and Brazil equity funds drew $130m. Meanwhile, Lipper data show that performance was negative in the week ended January 21. EM equity funds lost a hefty 4.12%, LatAm funds were down 6.95% and global small and mid-cap funds lost 3.32%. Year-to-date, EM funds have lost 1.05%, LatAm funds are down 5.38% and global small and mid-cap funds shed 0.58%.
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EM Fond Funds Draw Cash, Lose Money
EM bond funds have enjoyed their biggest cash inflow in 8 weeks, bagging $574m in the 7 days to January, according to EPFR Global. It adds that funds focused on local currency debt saw the biggest gains, as the spread between US Treasuries and JPMorgan’s benchmark EMBI+ index remained south of 300bp. Performance, however, was negative, with EM debt funds shedding 0.77%, international income funds dropping 1.12% and global income funds down 0.39%, according to Lipper. Year-to-date, it adds, EM debt funds have gained 0.89%, international income funds are up 0.82%, and global income funds gained 1.14%.