Category: Equity
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ECM Expectations Mild

by LatinFinance

Equity capital market volumes have undershot 2011’s disappointing numbers so far this year, but bankers are holding out for a September pickup with a number of transactions in the pipeline. Total issuance plummeted 45% year on year through the end of July. But Daniel Darahem, head of LatAm ECM at JPMorgan, tells LatinFinance that despite this: “If market conditions allow it, we expect a strong pipeline of multi-billion dollar transactions for the second half.” Issuers are already lining up, most notably Santander Mexico’s $2bn-$4bn IPO. Cemex could follow with the carve-out of its ex-Mexico LatAm assets, a deal seen raising as much as $1bn.
Bankers say a large, oversubscribed deal that went on to trade well – ideally helped by a more supportive global environment – would help turn the tide for the market. “There should be a pickup in the second half for equity. It won’t be as bad year-end as it is now,” says Alberto Pandolfi, head of LatAm M&A at Citi, tells LatinFinance. “The Andean region is very attractive. In Peru there isn’t a single stock to play the consumer sector – it just doesn’t exist. There will have to be companies taking advantage of this to finance themselves. There is going to be huge appetite for this, and in Colombia too,” he adds. Through August 24, regional volume stood at $11.74bn from 48 deals, according to Dealogic, compared $25.43bn from 63 in the corresponding period in 2011. BTG Pactual leads with $1.36bn from 13 deals, followed by Citi ($1.08bn from 6) and JPMorgan ($1.02bn from 6). BTG earned the most, $26m, or 11.2% of the pool. “It’s been the most challenging year we’ve had in five years. These companies will need capital. It’s a matter of when. Markets don’t stay closed forever and at some stage you will have windows,” says a Sao Paulo-based banker.

Posted inDaily Brief

Mexichem Seeks Equity, Debt Sale

by LatinFinance

Mexican industrial conglomerate Mexichem has taken initial steps in a financing plan that would consist of $2bn in equity and debt, the company says, as it seeks to refinance existing debt and address working capital. It aims to raise $1bn via a capital increase and a separate $1bn portion in USD long-term debt. Pending National Banking and Securities Commission (CNBV) and Mexican Stock Exchange (BMV) approval, Mexichem would pursue a primary public offering among investors in Mexico, with distribution in other markets abroad, while the debt portion would be issued in the international bond market. “The company will call an extraordinary general shareholders’ meeting where the corresponding capital increase shall be proposed, as shall the suggestions that it be made through a public offer. Should it be approved, the existing shareholders will not have a preemptive right,” it says. The proposed deals are subject to various approvals and suitable market conditions.

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Equity Books Inflows

by LatinFinance

LatAm equity funds saw net inflows of $53m and EM equity funds saw net inflows of $324m during the week ended August 22, according to EPFR. In terms of performance, LatAm funds lost 1.67% during the week ended August 23, and are up 3.02% year-to-date, according to Lipper. EM funds fell 0.46% during the week, to bring them to a ytd gain of 7.83%. Global small and mid-cap funds fell 0.18% on the week, and have earned 9.40% ytd.

Posted inDaily Brief

IB Fee Pool Seen Stable: Bankers

by LatinFinance

Investment banking revenue is down from one year ago, but not so much that catching 2011’s total fee haul is impossible. With fees charged for deals relatively stable from last year, bankers say volumes will be more of a driver for their revenue than anything, and diversification away from Brazil is becoming more and more important. A strong September and October in DCM and ECM would help the picture the most. “The only fee base that came down [this year] was ECM,” Guilherme Paes, head of investment banking at BTG Pactual, tells LatinFinance. DCM fees are the same, he says, and M&A fees are stable and still attractive. At $1.04bn through August 24, the regional revenue total from M&A, loans, ECM and DCM is down versus the $1.38bn in corresponding period in 2011, according to Dealogic. BTG led the overall league tables in the region through August 24, with $114m, or 10.9% of the total pool. The bank was also at the top of the M&A table, with $75m, and the ECM table, with $26m. In ECM, fees have been affected by a greater number of banks per transaction, as well as many deals not resulting in full fees due to lower-than-expected pricing. In lean times, local markets can also help. “DCM and M&A markets continue to be much better than last year due to the fees coming from local markets. The local markets are very strong, and always open,” Paes says. Issuance and M&A activity, and the accompanying revenues, should still be dictated by global economic conditions, and news from the US and Europe. While Brazil still accounts for most of the region’s business, bankers stress the need to diversify revenue streams away from Brazil and into growing markets including Peru, Chile, Colombia and Mexico. “The revenue base is more affected by Brazil. LatAm ex-Brazil is probably flat, but given the size of Brazil, the overall level is down,” Javier Vargas, Co-Head of Investment Banking for Latin America at Credit Suisse, tells LatinFinance. “Investors are a bit more careful about Braz

Posted inDaily Brief

La Polar Set for Share Subscription

by LatinFinance

Chile’s La Polar has received final approval for an equity sale targeting CLP120bn ($249m), it says. The retailer will start meeting local investors next week as it looks to raise 750m new shares as part of an agreement with creditors following the disclosure of heavy losses last year. Participating shareholders have until Tuesday to register their intent, with the subscription period opening September 3. The price of the subscription will be equal to the average price of the three days prior to subscription minus a 5% discount, with a minimum of CLP160. Shares closed at CLP218 Friday. The retailer set aside nearly $1bn-equivalent in loan loss provisions last year amid accusations of fraud after the company arbitrarily overcharged its credit clients and is undergoing the increase as part of a $900m restructuring with creditors. Creditors recently granted an extension to October 29 to complete the equity sale. Celfin is managing the capital raise, and Lazard is the advisor on the restructuring.

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Brazilian Car Dealer Plans IPO

by LatinFinance

Used car dealer AutoBrasil has filed for an IPO, according to a prospectus, to raise funds for expansion. The issuer aims to begin investor meetings September 25 and is targeting an October 16 pricing. The Brazilian does not yet indicate the size of the sale, which includes both a primary and secondary portion. BTG Pactual, Credit Suisse and Itau have been hired to manage. Formed this year from a group of dealerships that together brought in BRL2.59bn in sales in 2011, AutoBrasil is in 15 Brazilian states and has a 1.2% market share. It plans to use the proceeds for working capital and to open new stores. A private equity fund linked to BTG owns 11% of AutoBrasil, and is among the selling shareholders in the secondary portion.

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Manabi Turns to Private Funds

by LatinFinance

Manabi, the Brazilian miner which canceled IPO plans this year, has instead turned to private investors for $300m in funding. US-based EIG Global Energy Partners has contributed $150m, with a group of investors including Ontario Teachers Pension Plan taking the remainder, Manabi says. The pre-operational iron ore miner sold 240,000 preferred shares at $1,125 each. An official at the company declines to indicate the size of the equity stake involved. Credit Suisse, Goldman Sachs and Itau have been working with Manabi. The IPO process had never advanced to the point where Manabi indicated the size of the float or how much it planned to raise. The miner was founded last year and is developing the Morro Pilar and Morro Escuro projects in the state of Minas Gerias. OTTP was an initial investor in Manabi prior to Thursday’s investment, along with Korea Investment Corporation and Southeastern Asset Management. Strategic investment from private equity, pension funds, sovereign wealth funds and others should continue to see strong activity from Brazilians cancelling IPOs and still in need of funds, bankers say.

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Cemex Plots Colombia Float

by LatinFinance

Cemex is aiming to IPO the Cemex Latam unit holding its regional ex-Mexico assets, it says, as part of its broader global asset sale strategy. The subsidiary, holding substantially all of the Mexican cement maker’s assets in Central America and South America, is to list in Colombia, selling shares there and also through an international portion. Cemex does not give details as to the size, but analysts estimate the stake to be foated, likely 25%, could be worth about $750m-$1.0bn, an amount that would help with the amortization payment contemplated under the new debt refinancing agreement Cemex is negotiating with creditors. The move appeared to be taken as additional positive news – following Monday’s announcement of creditor acceptance of a refinancing operation – with both bonds and shares rising. If conditions were not ripe for the sale of shares, undergoing the listing only could be a temporary option, according to sources following the process. “Although the $1.0bn amount the company is paying down does not improve materially its total debt situation, we believe the [debt refinancing and equity sale] bring a credible solution for Cemex’s liquidity situation,” Credit Suisse says in an equity report. CS expects an 8.0x EV/Ebitda multiple for the Latam unit. Cemex announced this week that it had reached 90% acceptance in its offer to holders to push out to 2017-2018 debt due 2014 totaling more than $7bn. It has extended the offer through September 7 in the hopes of getting more than 95%. Cemex bonds were heard up a point Wednesday, and its CPO shares rose 4.19% to MXP10.69.

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Developer Plots RE Fund

by LatinFinance

JHSF Participacoes plans to launch a Fundo de Investimento Imobiliario (FII) in brazil’s domestic market, it says. The developer has started the registration process to raise equity in a vehicle invested in its properties. JHSF declines to provide additional comment. The developer of commercial, retail, and residential properties has previously raised funds in Brazil’s equity and domestic bond markets.

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