Category: Equity

Grupo Financiero Banorte has laid out additional details for its $3bn equity follow-on, picking Citi, JPMorgan and Morgan Stanley to manage international and domestic portions, joined by BTG Pactual, Itau, Goldman Sachs, Merrill Lynch, and Mitsubishi UFJ on the international and Banorte-Ixe on the domestic. The exact timing and number of primary shares to be sold remain to be determined, though a July pricing is expected. It plans to use the proceeds to pay back a loan, fund its acquisition of stakes in its businesses from Italy’s Grupo Generali and the IFC. The one-year $800m loan was signed in February, arranged by JPMorgan, Mitsubishi, Merrill Lynch and Morgan Stanley, and pays Libor+80bp. Grupo Banorte agreed Monday to pay Generali $857.5m for the purchase of Seguros Banorte Generali y Pensiones Banorte Generali. The IFC took a $150m stake in Banorte in 2009. Grupo Banorte bought out a third of the IFC’s stake in February, spending MXP2.1bn ($168m), and agreed to pay the development back a price equal to 54m of own shares to take out the remaining stake. Banorte’s core capital equated to 11.79% of its risk weighted assets at the end of the first quarter, and Banorte-Ixe, 10.62%, under Basel III methodology. Grupo Banorte is Mexico’s third-largest financial institution, with assets of MXP955bn. Banorte shares closed Thursday at MXP77.33, falling 5.2% during Wednesday’s and Thursday’s sessions, after the first announcement of the transaction on Wednesday.

Mexico’s Hoteles City has priced a MXP2.92bn ($231m) IPO, landing at the bottom of its price range though offering a sign that equity deals can still get done despite the selloffs seen in recent weeks. The Mexican hotel operator is selling 87.0m primary and 34.5m secondary shares at MXP24.00 each, according to people following the sale. The level comes versus a MXP24.00-MXP29.00 price range. The total assumes the use of a 15% greenshoe. About 60% of the deal was expected to be placed in Mexico and 40% internationally, though initial filings indicated an intention to sell more abroad. The secondary share sellers include founders and company officials, as well as investors such as Wamex, the IFC and the IDB. Proceeds from the primary portion will be used for expansion. The operator is raising funds to grow organically and through acquisitions in Mexico, as well as move forward with international plans. City has one hotel in Costa Rica, and has its eye on Peru, Chile and Colombia, according to an investor presentation. It plans to open 29 hotels during the next 24 months. The sale offers yet another equity play on Mexican domestic travel rates increasing along with the country’s economic fortunes, and follows the well-received Fibra Hotel and Fibra Inn real estate funds. Bank of America Merrill Lynch, Citi and Morgan Stanley managed the sale, joined by Actinver on the domestic tranche. The deal was expected to result in a 39% free float. Founded in 2003, City claims to have grown at an average of 34% per year since, reaching 71 hotels throughout Mexico at the end of last year, to make it the country’s third-largest operator. It operates the City Express, City Suites and City Junior hotels. The deal brings Mexico’s new equity issuance to $5.08bn from eight deals this year, compared to $1.49bn from two during the corresponding period in 2012, according to Dealogic data. The $2.73bn from five IPOs is the most ever in Mexico during the first six months of any year. Looking

Grupo Financiero Banorte is moving forward with an equity follow-on of up to $3bn, adding to the new issue pipeline as the broader markets face a challenging backdrop. The Mexican bank plans to hold the offer “as soon as” it receives approval, it says. It does not specify the exact timing or use of proceeds, though the announcement immediately follows Tuesday’s deal to buy out Assicurazioni Generali’s stakes in Seguros Banorte Generali and Pensiones Banorte Generali for $858m, and when the market is concerned about its capital levels. “Banorte needs to do this before the window closes. The best time would have been in the first quarter, after the Bancomer Afore purchase,” says an FIG equity analyst, referring to the group’s $1.6bn purchase of BBVA’s Mexican pension operation in November. He notes the bank has been at a “competitive disadvantage” with a core capital ratio around 10.6%, lower than the 15%-19% seen at other large Mexican banks, and that market conditions aren’t likely to improve. In a note, Fitch expects proceeds to be used for the Generali buy, to buy out the IFC’s stake in Banorte and to liquidate a credit facility used to buy BBVA’s Afore. The bout of US treasury yield movements and selloffs in EM equity markets may complicate life for some equity issuers coming in June and July, though bankers expect deals should still get done. “EM hasn’t been the flavor of the month, and the currency movements will challenge issuers to meet their targets,” says one ECM banker. Banorte’s planned deal – equal to about 20% of the bank’s market value – will feature both international and domestic tranches and could end up being Mexico’s largest this year and its biggest since Santander Mexico’s $4.1bn IPO in September.

Corporacion Inmobiliaria Vesta is targeting more than MXP4.0bn ($309m) from its equity follow-on, and has set a June 25 pricing date. The Mexican real estate developer is offering 120m primary shares and 44.5m secondary shares, assuming a 15% greenshoe, which would mean a MXP4.37bn deal at Wednesday’s MXP26.57 closing price. It expects to sell two-thirds of the primary portion globally and one-third in Mexico. DEG, a private sector financing arm of German development bank KfW, and the real estate investment arm of the German Deka are sellers in the secondary portion. The sale should cut their combined stake from 18.12% to 5.19%. Vesta owns 87 industrial properties and distribution centers throughout Mexico, with a market value of around $749m. Credit Suisse and Santander are managing the transaction. Vesta sold a $250m-equivalent IPO in July last year, which was priced at the low end of a MXP19.0-MXP21.00 range. Mexican investors bought two-thirds of that deal. The follow-on joins a busy pipeline, which next features the IPO of Hoteles City, targeting MXP3.22bn and scheduled to price today.

Mexico’s Grupo Financiero Inbursa has set June 25 as the date to price the follow-on sale of the 6.4% stake belonging to CaixaBank, according to people familiar with the deal. The sale of 423m secondary shares would raise MXP11.70bn ($910m) at Tuesday’s MXP27.65 closing price, or MXP11.00bn if done at the MXP26.00 at which Caixa sold 3.7% directly to Inmobiliaria Carso last week. Both the sale to Carso, like Inbursa a Carlos Slim company, and the upcoming follow-on are part of a plan for Caixa to raise funds by selling a10% stake in Inbursa. After the follow-on, Caixa expects to hold 9%-10% in the Mexican bank. Credit Suisse, Inbursa and UBS are global coordinators, with BTG Pactual as bookrunner on the international portion of the sale and Citi and BBVA joining on the Mexican portion. Caixa is raising funds to boost its Tier 1 capital. Next up in the Mexican ECM is the IPO of Hoteles City, scheduled for Thursday and targeting MXP3.22bn.