Brazil’s Queiroz Galvao Oleo e Gas (QGOG) is set to price its IPO today, targeting at least $600m in the SEC-registered sale. Books were heard covered Wednesday. In a test of investor appetite for stocks in the broader Brazilian oil chain, the drill rig operator of the Queiroz Galvao conglomerate is offering 31.6m primary shares, assuming a 15% greenshoe, at $19.00-$21.00, meaning a $632m transaction if done at the midpoint. QGOG is raising funds to make down payments for two ultra-deepwater drillships, and raise capital for new and existing projects. JPMorgan, Bank of America Merrill Lynch, and Itau are global coordinators, along with Credit Suisse and Bradesco as joint bookrunners and Jefferies, DNB, Banco do Brasil, BNP Paribas and ING as co-managers. The QGOG Constellation unit is 80% controlled by QGOG International Sarl, a vehicle owned by members of the Queiroz Galvao family. The issuer is hoping a Luxembourg registration and a US listing attract global energy investors as well as the LatAm and EM-focused buysides that have been finicky in the last two years. Brazil has not seen an oil sector issuer since QGOG’s sister unit Queiroz Galvao Exploracao e Producao made its public equity debut in February 2011, raising just over $900m-equivalent. Seabras Servicos de Petroleo was another looking in 2012 that shied away.
Category: Equity
Sanborns Oversubscribed Heading into IPO
Grupo Sanborns was heard oversubscribed Wednesday ahead today’s IPO pricing that is targeting MXP12.74bn ($1.00bn) and scheduled to price today. The deal is drawing interest from investors ready to bet on Mexico and on the retail sector. “Retail is a very desirable sector, and more so than Carlos Slim’s other holdings,” says a US investor looking at the deal. The Mexican retail operation owned by Carlos Silm’s Grupo Carso is offering 431.7m shares, assuming a 15% greenshoe, at MXP27.00-MXP32.00 each, according to offering documents. The shares are to be divided into domestic and international tranches. The issuer is raising funds for expansion and working capital. Grupo Sanborns will hold the iconic Sanborns stores, as well as other brands including Sears and Sacks Fifth Avenue, located almost entirely in Mexico, with locations also in El Salvador and Panama. Inbursa and Credit Suisse are global coordinators, with Citi, Morgan Stanley and Santander serving as bookrunners. The deal will leave Sanborns with an 18% free float, and Carso with 82% ownership.
Cencosud Defines Rights Offer
Cencosud has set the details for a CLP866bn ($1.83bn) equity capital raise, it says. The retailer is offering existing holders 333m shares at CLP2,600 each, to raise funds to help with the purchase of Carrefour’s Colombian assets. The level compares to Tuesday’s 2,915 closing price. The period opens February 12 and closes March 14. Cencosud signed a $2.6bn bridge loan to pay for the acquisition in October with a group of banks led by advisor JPMorgan. It then raised $1.25bn in November from the sale of 2023 bonds.
Jamaican, Brazilian to test ECM Appetite for Smaller Sales
Jamaica’s National Commercial Bank (NCB), targeting $225m, and Brazil’s Linx, targeting $220m, are each scheduled to price equity transactions today. After larger deals this month for the likes of Fibra Uno and Estacio, the pair will offer an indication of how buyers – particularly in the international space – look at less liquid issues. IT provider Linx will bring the first Brazilian IPO of 2013, following two years of mostly disappointing small debuts from Brazilians. The issuer is betting its status as a provider of software specifically to Brazil’s retail sector will boost interest. It is offering 19.6m shares, assuming a 15% greenshoe, at BRL23.00-BRL27.00 each, according to regulatory documents, raising BRL490m ($246m) at the midpoint. The total includes 6m secondary shares to be sold by a private equity fund linked to Itau. Linx is seeking to raise funds for acquisitions and for working capital. BTG Pactual, Credit Suisse, Itau and Morgan Stanley are managing the sale. Meanwhile, Jamaica’s National Commercial Bank (NCB) is to hold an equity follow-on representing the debut of its ADRs in the US, reviving a process it initiated in May of last year. On offer are 16m ADRs, representing 804m common shares, at $13.00-$15.00 each, indicating a $224m transaction if done at the midpoint. The bank’s common shares, listed in Jamaica and Trinidad & Tobago, closed at JAD20.00 ($0.22) Tuesday. Of the total, 3.6m ADRs are secondary shares to be sold by Chairman Michael Lee-Chin, who should see his stake in the bank go from 64.0% to 43.6%. NCB is raising funds for general corporate purposes, including organic growth and possible acquisitions. JPMorgan and Macquarie are managing the sale. Thursday should see a return to bigger size transaction, with the $1bn IPO of Mexico’s Grupo Sanborns and $600m debut of Brazil’s QGOG Constellation.
BdB Sets Seguridade Meeting
Banco do Brasil’s shareholders will meet February 20 to approve the IPO plan for the BB Seguridade insurance unit, the bank says. The state-controlled lender has not commented on the size of the transaction, though the market is expecting as much as BRL5bn ($2.51bn), perhaps during the June-July issuance window. The deal is to include both primary and secondary shares, and the bookrunners include Banco do Brasil, BTG Pactual, Bradesco, Brasil Plural, Citi, Itau, and JPMorgan, according to people following the process. The state-controlled bank is seeking to consolidate its insurance businesses into a single company, BB Seguridade, to lower costs, increase scale and be better prepared for possible expansion. BB Seguridade would control Banco do Brasil’s two insurance joint ventures with Madrid-based Mapfre, and the bank plans to also expand into dental and health insurance brokerages. The listed company would directly control two holdcos, one responsible for insurance brokerage activities and the other for all other insurance operations.
BB Seguridade IPO Chugs Along
Banco do Brasil is moving ahead with plans to carve out its insurance operation, and is ready to submit the matter to shareholders, it says. The bank has not commented on the size, though the market is expecting as much as BRL5bn ($2.51bn). Realization of the IPO “will depend on favorable conditions in the international and domestic capital markets,” the bank says. The timing is unclear, but ECM estimate the transaction may arrive during the June-July issuance window. The deal for the unit to be called BB Seguridade is to include both primary and secondary shares, and the bookrunners include Banco do Brasil, BTG Pactual, Bradesco, Citi Itau, and JPMorgan, according to people following the process. The state-controlled bank is seeking to consolidate its insurance businesses into a single company, BB Seguridade, to lower costs, increase scale and be better prepared for possible expansion. BB Seguridade would control Banco do Brasil’s two insurance joint ventures with Madrid-based Mapfre, and the bank plans to also expand into dental and health insurance brokerages. The listed company would directly control two holdcos, one responsible for insurance brokerage activities and the other for all other insurance operations.
Brazil Eliminates IOF for FIIs
Brazil’s government has exempted foreign investors from the IOF tax on purchases of shares in Fundo de Investimento Imobiliario (FII) real estate funds, it says. The move, done with an eye on increasing investment in Brazil’s real estate sector, lowers the tax from the previous 6%. The REIT-like FII class saw a record year in 2012, issuing BRL11.0bn ($5.53bn), compared to BRL7.66bn the year before, according to the CVM. There are 15 transactions in the pipeline now, totaling BRL4.21bn. Performance is also strong, with the Bovespa’s FII index up 35% last year. The market appeared to receive the news well, with the Banco do Brasil Progressivo FII, the largest issue, up 4.5%, according to a trader. Brazil taxes foreign investment in domestic bonds at 6% percent, while stocks are exempt.
Investor Exits Adecoagro
HBK Capital Management has completed the sale of its shares in Brazil’s Adecoagro, raising $112m in a block trade, according to regulatory documents. The US investment firm sold 13.9m shares at $8.00 each, representing a 1% discount to Wednesday’s $8.18 closing price. Morgan Stanley managed. The shares are sold out of the HBK Master Fund, and represent its entire 17.09% stake in the George Soros-backed grower and renewable energy producer operating in Brazil, Argentina and Uruguay.
Cultiba Re-IPOs at Low End
Mexico’s Cultiba has priced a MXP3.94bn ($310m) equity follow-on that serves essentially as a new IPO, landing at the bottom of its price range. The Pepsi bottler formerly known as Embotelladoras Unidas offered 112.7m shares, assuming a 14.7m share greenshoe, at MXP35.00 each, according to sources familiar with the transaction, versus a MXP35.00-MXP40.00 range. The total includes 23.8m secondary shares to be sold by a group of existing shareholders. Books were heard covered, and some 30%-40% of the sale was expected to go to international buyers Wednesday night. The beverage sector is considered one of Mexico’s most solid consumer stories, though buyers may have found Cultiba’s range a bit pricey. “The multiple [suggested by the midpoint of the range] is a bit more expensive than the industry average,” says a Mexico-based beverage analyst, estimating 17.5x financial value/Ebitda, compared to larger peers Coca-Cola Femsa (17.0x) and Arca Continental (17.1x). The shares sold represent 15.6% of the company, assuming the greenshoe is exercised. Cultiba is raising funds to repay bank loans and also targets additional capital for investments. The bottler has a $125m loan due 2022 with Rabobank, costing it Libor+225bp, and an MXP1.61bn ($126m) 2022 loan with Banorte at TIIE+160bp. Bank of America Merrill Lynch, Banorte-Ixe, BBVA Bancomer, Credit Suisse, Inbursa and JPMorgan managed the transaction. Mexican new issuance is scheduled to resume next week, with the highly anticipated $900m-$1.0bn IPO of Caros Slim’s Grupo Sanborns.
Bottler Set for ECM Reintroduction
Mexico’s Cultiba is scheduled to price today an equity sale that should raise at least MXP3.94bn ($312m). Billed as a re-IPO, the Pepsi bottler formerly known as Embotelladoras Unidas is offering 112.7m shares, including a 14.7m share greenshoe, at MXP35.00-MXP40.00 each, according to regulatory documents, indicating a MXP4.20bn transaction at the midpoint. The transaction was heard to be covered late Tuesday, though people following the sale report the issuer communicating substantial international and domestic interest, though no firm indications of demand. The total includes 23.75m secondary shares to be sold by a group of existing shareholders. The shares are to be sold in international and local tranches, and represent 15.6% of the company, assuming the greenshoe is exercised. The issuer is raising funds to repay bank loans and also targets additional capital for investments. The bottler has a $125m loan due 2022 with Rabobank, costing it Libor+225bp, and an MXP1.61bn ($126m) 2022 loan with Banorte at TIIE+160bp. Bank of America Merrill Lynch, Banorte-Ixe, BBVA Bancomer, Credit Suisse, Inbursa and JPMorgan are managing the transaction.