Grupo Sanborns has priced a MXP12.09bn ($950m) IPO, landing near the low end of the price range. Demand for the deal was heard to be about 2x. The retail operation being carved out of Carlos Slim’s Grupo Carso priced 431.7m shares, assuming a 15% greenshoe, at MXP28.00 each, versus a MXP27.00-MXP32.00 range. The sale had to overcome recent concerns about Carlos Slim companies, with crown jewel America Movil seeing possible losses at its Dutch investment KPN. That said, many on the buyside noted that Sanborns represents some of the top assets in Slim’s portfolio, with retailers likely among the biggest beneficiaries if Mexico’s economy lives up to strong forecasts. “This is a strong company and well known, but it may be similar to Cultiba. Valuations are rich in Mexico right now, and investors are very disciplined,” says an ECM banker away from the deal. Pepsi bottler Cultiba priced at the low end of its range last week in a $310m IPO. Sanborns is raising funds for expansion and working capital. It contains the iconic Sanborns stores, as well as other brands including Sears and Saks Fifth Avenue, located almost entirely in Mexico, with locations also in El Salvador and Panama. Inbursa and Credit Suisse were global coordinators, with Citi, Morgan Stanley and Santander serving as bookrunners. The deal was expected to leave Sanborns with an 18% free float, and Carso with 82% ownership. The sale is the last is a busy period for the region’s ECM, with other deals in the pipeline expected to wait for the 4Q financials window.
Category: Equity
QGOG Readies Debut
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.
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.
BNDESPar Adds to Marfrig Stake
Marfrig is set to raise BRL350m ($176m) following the approval of the issuance of convertible shares to BNDESPar. The sale of 43.7m shares at BRL8.00 each comes on the back of December’s BRL1.05bn equity follow-on, and allows the investment arm of the Brazilian development bank to maintain its position in Marfrig. The securities become convertible in 2015. BNDESPar now holds 19.63% of the Brazilian meatpacker. Separately, Marfrig named Frank Ravndal as CEO of its US subsidiary Keystone Foods, it says. He starts in his new role on February 17, taking over for interim CEO William Andersen. Ravndal joins from Cargill, where he was for 17 years, serving in a CEO capacity at several of its businesses.
Linx Starts Brazilian IPO Year at High End
Linx has given the Brazilian IPO market the start it wanted this year, pricing a BRL528m ($265m) deal at the top of its range. In a stark contrast to the trend in 2012, the transaction drew 20x demand, according to people familiar with the terms. The provider of software to the retail sector priced 19.6m shares, assuming a 15% greenshoe, at BRL27.00 each, according to the CVM, versus a BRL23.00-BRL27.00 range. The total includes 6.8m secondary shares sold by a private equity fund linked to Itau. Betting that a retail focus and solid growth story would overcome the usual investor doubts about smaller deals, Linx came to market to raise funds for acquisitions and for working capital. “Investors have liked [larger public Brazilian IT provider] Totvs and its stability. They see this type of company put together with the expected growth in retail and it is an attractive proposition,” says an equity analyst following the sector. Throughout Brazil, retailers are becoming more sophisticated and needing IT services, he explains. New clients appear all the time meaning barriers to entry are low, through once long-term contracts are signed, it becomes harder to switch – favoring players that gain size and scale now and in the next few years. BTG Pactual, Credit Suisse, Itau and Morgan Stanley managed the sale. Linx offers both cloud-based and on-premises products for Brazilian retailers. It has been operating for 27 years and claims 29% market share. Elsewhere, the market awaited late Wednesday the pricing of National Commercial Bank Jamaica’s (NCB) equity follow-on representing the debut of is US ADRs. The bank would raise $224m if it priced at the midpoint of a $13.00-$15.00 range. Today, ECM attention now turns to the week’s heftier transactions, the $1bn IPO of Mexico’s Grupo Sanborns and the $600m SEC-registered IPO of Brazil’s QGOG Constellation.
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.