Indian software firm Infosys has opened a LatAm headquarters in Monterrey, Mexico. The subsidiary will provide business consulting and information technology services for industries including banking, financial services, retail, consumer packaged goods, resource, energy and utilities. It will also serve as the firm’s development center for the region. Infosys chose Mexico over other countries in LatAm and the Caribbean because of the broad language skills available, geographical proximity to Canada, the US and Europe, and because many Infosys clients have operations there already. Infosys has appointed Mohit Joshi to head the new subsidiary. Joshi, formerly a group engagement manager with the company’s banking and capital markets organization, has more than 12 years of client and leadership experience. The Mexico operation will employee around 250 people, from Mexico and other countries, in its firm year of operation, ramping up to nearly 1,000 employees in its third year.
Category: Bonds
CVM Reportedly Probing Cosan
Brazil’s SEC, the CVM, is considering taking action against Brazilian sugar refiner Cosan, which is reorganizing to incorporate in Bermuda, according to a report in Brazilian daily Estado de São Paulo. Cosan raised $1.05bn with its US IPO and Brazilian market follow-own last Thursday via Credit Suisse, Goldman and Morgan Stanley. According to Estado, the CVM is trying to determine if the company’s proposed shareholder reorganization violates the rules of the Novo Mercado and the recently updated laws governing corporations. Potential penalties reportedly include a $30m fine and dismissal of board members. Under Cosan’s reorganization, controlling shareholder Rubens Ometto will receive 10 votes for each share, ensuring control of Cosan with just 10% of Cosan’s stock. In addition, any deals done in the US would not require Brazilian shareholder approval. The CVM has set a deadline of this Thursday for minority shareholders in Cosan SA, the Brazilian company, to decide whether to participate in the public exchange offering for shares in Cosan Ltd., based in Bermuda.
Latin Equity Issuers Brave the Storm
Despite some of the worst losses for LatAm bolsas in recent memory, issuers are lining up to sell stock. Two Brazilian real estate firms filed Friday with Brazil’s CVM. Construtora Tenda is planning an IPO on the Novo Mercado through Itaú BBA, while BR Properties, a real estate investment vehicle targeting office and warehouse spaces, also filed an IPO. The Bovespa finished Friday 1.13% stronger after a bloody week, while Mexico’s IPC ended 2.58% higher. Both were helped by a rebound in US markets, but dedicated equity investors have been severely battered and sentiment is cautious. BR Properties is owned by private equity firm GP Investments and co-investors Lehman Brothers Real Estate Partners, Sandell Asset Management, Tudor Group, Banco Safra, Talisman Special Purpose Fund, The Peter Malkin Family and Belfer Management. Credit Suisse is leading that offer. They may face valuation challenges as investors appear to be experiencing sector fatigue.
Local Markets More Attractive, Say Bankers
Amid the international meltdown, New York-based DCM bankers say the more attractive financing opportunities for many LatAm credits will be in the local markets. Bankers at Wall Street shops say pricing levels in the local secondary suggest a pickup in domestic issuance come September. “The repricing is not as bad [in the local markets,]” says a New York trader, adding yields on recent local deals have been aggressive to the point where adding the cost of a swap makes a local offering unattractive for foreign investors. Recent offerings by Mexico sofoles Patrimonio, a MXP400m in 2012 asset-backed notes, and Metrofinanciera, which offered MXP1.6bn in 2014 notes backed by construction loans, were viewed by bankers on the deals as having benefited from the strength of the local markets. “There are a lot of opportunities for issuers that want to issue locally at attractive levels,” adds a trader. However, any entity wanting to do lower rated deals or achieve significant size or tenor will have to wait until dollar markets reopen.
Bladex Sets up Factoring Joint Venture
Banco Latinoamericano de Exportaciones (Bladex) has signed an MOU with FIMBank in Malta to establish a joint-venture company to offer full factoring services to companies, banks and other financial institutions in Latin America. “The factoring business offers an attractive growth opportunity for Bladex and FIMBank in Latin America as companies seek to translate discounted receivables into improved cash flow,” says Bladex. The bank’s CEO, Jaime Rivera, says the deal will allow Bladex to offer a greater range of trade finance-related products and further diversify its revenue streams. “Factoring is the fastest growing trade finance product, outperforming all other instruments in international as well as domestic trade, especially with regards to small and medium-sized enterprises (SME’s),” says Margrith Lutschg-Emmenegger, president of FIMBank.
Cabei Signs Finland Accord
Cabei, the Central American multilateral, has signed an MOU with Finnvera, the Finnish export credit agency to promote corporate activity from the Scandinavian country. Cabei will get credit guarantees from the Finnish government to improve financing for the public and private sectors in Central America. “Finnvera and Cabei have supported projects in Central America worth approximately $180m and are currently considering deals worth around $40m,” says Cabei.
CentAm Remittances Rising
The flattening of remittances flows to Mexico contrasts with the continued growth of money transfers to Central American countries, according to the IDB. Remittances to El Salvador, Guatemala and Honduras rose by an average of 11% during the first half of 2007, year-on-year. Mexican and CentAm migrants have similar demographics in terms of age, incomes and length of residence in the US. Most of them work in industries like construction, hotels, restaurants, food processing and agriculture.
Mexican Remittances Drop, Says IDB
Fewer Mexican emigrants are sending money back from the US, according to the IDB’s Multilateral Investment Fund (MIF). “The percentage of Mexicans who regularly make remittances fell to 64% in the first half of 2007, down from 71% last year,” says the MIF. The drop was the steepest in states where Latin American immigration is most recent, at 56% this year from an average 80% in 2006. The survey was conducted in June.
Poverty Reduction Specialist Joins IDB
Santiago Levy Algazi, a former Mexican deputy minister of finance, is joining the IDB as chief economist and general manager of its research department. The academic and expert in social programs brings public sector experience to the bank in his roles as general director of the Mexican Social Security Institute, deputy finance minister, president of the Federal Competition Commission and director of the economic deregulation program at the trade ministry. He designed a conditional cash transfer program known as “oportunidades,” which assists more than 5m of Mexico’s poorest households. He also worked as a consultant to the UNDP on poverty reduction policies. Levy replaces Guillermo Calvo, who left the IDB to become director of Columbia University’s program of economic policy management.
IDB Lends in Haiti
The IDB has approved a $12.5m, fast-disbursing grant to support Haiti’s management of public sector resources. This grant, which will be disbursed in a single tranche, could be followed by a similar grant in 2008, says the IDB. The financing is for a broad range of projects in Haiti, with emphasis on basic infrastructure, such as highways and rural roads.