Cemex LatAm has launched its Colombian IPO, it says, expected to raise at least $750m. The unit holding the Mexican Cement maker’s assets in Colombia, Panama, Costa Rica, Brazil, Guatemala, Nicaragua and El Salvador plans to sell 126m shares, including a 15% greenshoe, to be divided at the time of sale into Colombian and 144a international tranches. A price range was expected to be made public as soon as today, according to sources familiar with the process, with pricing expected the week of November 5, following investor meetings beginning this week. Sources following the deal point out that it is breaking new ground for Colombian offerings in terms of allowing a price range – rather than fixing the price before taking orders from investors during a prolonged period – and by allowing for the sizes of the international and domestic portions to be determined at a later point in the sale process than is usually done in Colombia. Discussions with regulators about these points are heard having pushed the sale into November from the October pricing the company would have preferred. Cemex LatAm posted $466m in Ebitda in the first nine months of 2012, up from $362m in the corresponding period in 2011. Bank of America Merrill Lynch, BBVA, Citi and Santander are managing the sale. The deal comes as part of a plan to sell assets to meet debt maturity payments. Cemex in September got creditors to extend to 2017-2018 more than $7.2bn in debt that had been due in 2014, and followed up with a $1.5bn bond sale earlier this month.
Category: Equity
Cencosud Plots Acquisition Debt Takeout
After announcing the $2.6bn acquisition of Carrefour’s Colombian operations Thursday, Cencousud plans to access both the bond and equity markets to help fund the purchase. The Chilean supermarket operator signed a $2.5bn 12-18 month bridge loan from JPMorgan, which it will seek to replace. To do so, Cencosud plans a $1.5bn equity capital increase and the issue of $1bn 10-year bonds in the international market. The equity sale should occur within four months and the bond sale within three, according to remarks from company officials cited in local news and wire reports. The equity sale would come after a $1.23bn follow-on completed in June. The retailer’s last visit to the international bond markets came in early 2011. It sold $750m in 2021 bonds at a 5.661% yield, with 3.5x demand, through Deutsche Bank, JPMorgan and Santander. Fitch has placed Cencosud’s BBB minus rating on negative watch following Thursday’s purchase. Barclays calls the acquisition “credit negative,” seeing it as expensive by traditional metrics, and expresses concern about increased leverage. “The pressure for companies to act on buying opportunities even if their balance sheets are already stretched is a reality of the hyper-competitive food retail sector, but we do not believe bonds fully reflect these risks,” the bank says.
Cemex LatAm Pushes Ahead with IPO
Cemex LatAm has been given regulatory authorization for its Colombia IPO, a transaction expected to raise more than $750m. The carve-out of the Mexican cement maker’s non-Mexican LatAm assets is heard aiming to finalize pricing the week of November 5. Details on the exact size or number of shares are not yet available. Bank of America Merrill Lynch, BBVA, Citi and Santander are managing the sale. The deal comes as part of a plan to sell assets to meet debt maturity payments. Cemex in September got creditors to extend to 2017-2018 more than $7.2bn in debt that had been due in 2014, and followed up with a $1.5bn bond sale earlier this month.
FoF CCD Plots Reopening
AGC Controladora is planning to reopen its certificado de capital de desarrollo (CCD) transaction in Mexico’s domestic market, according to regulatory documents, targeting a February transaction. In July the private equity manager affiliated with US-based Northgate Capital raised MXP553m ($42m), the first pricing of what should ultimately be a fund of up to MXP13bn. through a 10-year fund. The 2022 transaction was called the first fund of funds in the CCD market, though it will be able to make direct investments in Mexican companies in addition making them to other PE funds. The ACG fund invests in a variety of sectors, but the return structure varies somewhat from most PE fund-based CCDs. Investors receive their initial investment plus a preferred return equivalent to the Mexican Bolsa’s plus 500bp, before the managers take a 5% cut, with any remaining funds being divided between investors (95%) and managers (5%). Vector is managing the transaction.
Banco de Chile Approves Equity Sale
Shareholders of Banco de Chile have approved an equity capital increase of CLP250bn ($530m), the bank says. The institution, owned by the Luksic group and Citi, is raising funds for expansion.
Eike to Add Cash to OSX
Brazil’s OSX plans to exercise half of a put option with controller Eike Batista, raising $500m by March, it says. The first $250m should be completed by the end of the month. The shipbuilder will issue new shares as part of the increase, done under an agreement dating back to OSX’s 2010 IPO. Batista is to pay the IPO price – BRL32.00 ($15.76) per share after correcting for a post-IPO share split – plus an adjustment for inflation. OSX shares closed at BRL12.95 Wednesday. The remaining $500m under the option has been extended to March of 2014. Batisa had been weighing a plan to delist OSX rather than pay the $1bn in a lump sum. Batista holds a stake of about 78% in OSX.
Mexican Lender Prices IPO at Low End
Mexico’s Credito Real has priced a MXP2.56bn ($200m) IPO at the bottom of the range, with the new shares trading down 3.1% in their first session. The offer from specialist in payroll, group microbusiness and durable goods loans was to be a test for small and mid-caps’ issuing prospects following the $4bn Santander Mexico IPO. Credito Real priced 116m shares late Tuesday, assuming a 15% greenshoe, at MXP22.00 each, versus a MXP22.00-MXP26.00 range. Primary shares represented 76% of the sale, with the remainder secondary shares sold by investors including Nexxus Capital – the largest pre-IPO holder with 18.3% – and Grupo Kon. The issuer came close to its goal of placing half the shares internationally, with 45.2% sold a 144a/RegS international tranche and the remainder in Mexico. Analysts saw the low end of the price range representing about 2.5x book value, and considered the 2.7x multiple suggested by the high end to be expensive. The level compares to the 3.5x seen by microfinance lender Banco Compartamos. Proceeds are to be used for general corporate purposes and for expansion plans. Deutsche Bank and Barclays managed the international portion, joined by Banorte-Ixe on the domestic tranche. The IPO now brings a pause to what has been the busiest month in recent memory for Mexican equity issuance. Credito Real, Pinfra and Mexichem have all followed in the wake Santander. Decent aftermarket performance – Santander is up 22.2% since its IPO and Mexichem up 7.6% since a follow-on – from the bigger deals has bankers encouraged that others in the pipeline can continue the run as international buyers continue to take a more favorable look at Mexico.
Market Awaits Credito Real IPO
Mexico’s Credito Real had yet to price an IPO targeting MXP2.8bn ($230m) late Tuesday. The specialist lender is offering 116m shares, assuming a 15% greenshoe, at MXP22.00-MXP26.00 each, meaning a MXP2.78bn transaction if done at the midpoint. About 73% of the deal is planned to be primary shares, with the remainder secondary shares to be sold by investors including Nexxus Capital – the largest holder with 18.3% – and Grupo Kon. Credito Real was aiming to place half the deal in Mexico and half internationally, through this was subject to demand. The bank was aiming to place half the deal in Mexico and half internationally, though this could vary along with demand. Analysts see the price range as suggesting a multiple of 2.5x-2.7x book value, compared to the 3.5x seen by microfinance lender Banco Compartamos. “Credito real operates in a segment that is underpenetrated, like all segments of banking in Mexico. It is also an area that sees high profitability and low levels of non-performing loans,” says a Mexico City-based equity analyst. He identifies some risk in Credito Real’s loan coverage provisions, which could be higher, but notes that payroll-deduction and the other types of lending Credito Real engages in are generally considered safe. Banking in Mexico is also set to continue growing around twice as fast as GDP. Proceeds are for general corporate purposes and for expansion plans. Deutsche Bank and Barclays are managing the international portion, joined by Banorte-Ixe on the domestic tranche. Targeting Mexico’s underbanked lower and middle classes, Credito Real grew by 63% during 2009-2011, and booked revenue of MXP1.0bn in the 12 months to June 30. Founded in 1993, it has funded itself through investment such as Nexxus’, in 2007, and in the local debt markets. Last year it acquired payroll lender Credifel.
Mexican Building Supplier Plots IPO
Mexican building supply conglomerate Elementia has its eye on an IPO in the medium term, according to local news and wire reports citing remarks from CEO Eduardo Musalem. The intention is unveiled just as Elementia announced the creation of the Cementos Fortaleza cement company. Elementia is 46% owned by Carlos Slim’s Grupo Carso and 54% by Antonio Del Valle, and has focused its fundraising to date on Mexico’s domestic debt market.
RE Specialists Plan Tourism CCD
Hospitality Equity Partners is preparing a certificado de capital de desarrollo (CCD) transaction for Mexico’s domestic market, according to regulatory filings. The 10-year deal of a to be determined size will create a fund investing in tourism real estate assets, both operational and in development, throughout Mexico. The return structure is similar to other CCDs, with investors receiving their initial investment plus a 10% preferred return, with further profits divided 80% to the investors and 20% to the managers. Santander is managing the transaction. Hospitality Equity Partners is an entity formed by Mexican real estate investment shop Real Capital Investment Management and Mexican Tourism advisory specialist Leisure Partners. The timing of the transaction is unclear.