Chile’s Inversiones La Construccion (ILC) has priced a CLP227bn ($469m) IPO, falling short of a $500m target but still becoming the largest-ever Chilean equity debut. Hooking more international investors than expected, the investment arm of the Camara Chilena de la Construccion (CChC) priced 3.7m primary and 28.5m secondary shares at CLP7,061 per share, according to the Bolsa. Total demand was CLP1.085trn, with competitive demand accounting for CLP555.85bn, according to the company. Foreigners buying into the 144a portion accounted for 35% of the sale. “This is a much higher portion of foreign participation than we expected,” says a banker managing the sale. The healthcare sector in LatAm is a popular one among investors, though ILC’s structure as a holdco for different types of businesses made it something of a challenging sell to those not familiar with Chile’s market. Local institutional and other non-retail buyers accounted for another 35% of the sale, with buyers linked to ILC making up 20% and 10% ending up in the hands of retail buyers. ILC is a holdco for health insurance firms including AFP Habita and Consalud and the Tabancura and Avansalud clinics. The secondary shares in the transaction are sold by CChC, which should maintain a 67% position in ILC. ILC is raising funds to capitalize its health care operations and for organic growth and acquisitions. Bank of America Merrill Lynch, IMTrust and JPMorgan managed the sale. The deal tops a $398m offering for Inversiones Aguas Metropolitanas in 2005 to become the largest in Chile’s history, according to Dealogic data. The shares closed Friday at CLP7,238. ILC brings to a close a week of mixed results in the LatAm IPO market, with Brazil’s Biosev pulling and Brazil’s Taesa and Mexico’s Vesta getting deals done. There is one more debut in the region scheduled prior to the traditional August hiatus, as Chilean construction firm Echeverria Izquierdo plans to raise about $100m-euqivalent in an August 3 sale.
Category: Equity
Vesta Thinks Ahead to Additional Equity
Following last week’s $250m-equivalent IPO, Mexico’s Corporacion Inmobiliaria Vesta could eventually return to the equity market to raise approximately $200m more, CEO Lorenzo Berho Corona tells a small group of reporters in New York. The industrial real estate specialist would likely wait about a year and a half before returning to the markets, and would also be open to domestic and international debt. He says Vesta is satisified with last week’s sale, in which investor demand was aided by increasing optimism for Mexico’s economy following this year’s change in government. “The demand we found was pretty much on the lower side of the range,” Berho says, noting they were much more concerned with the quality of the book than with size. Vesta priced at MXP19.00, versus a MXP19.00-21.00 range. He says the books were distributed 68% to Mexican investors and 32% to international buyers. He notes that the transaction received 1.4x demand, which is “pretty good for these days.” Despite concern in the international markets, he notes investors find Mexico attractive and that Vesta still sees room in Mexico to grow. “We see that the opportunities are really just starting,” he says of Mexico’s commercial real estate sector.
Biosev Postpones IPO
Brazil’s Biosev has decided to postpone its IPO, according to bankers managing the sale. The sugar, ethanol and bioenergy unit of Louis Dreyfus Commodities had attempted to price Wednesday night, but poor demand, even at a level below its BRL16.50-BRL20.50 ($8.17-$10.15) range, forced it to reconsider. It briefly considered attempting again Thursday night, before deciding to wait for better conditions. “The demand was not there at any price,” says a person close to the sale. The sale was always going to be challenging, given the track record this year and in 2011 for Brazilian equity debuts. Biosev was offering 41.2m shares, suggesting a BRL877m target at the midpoint of its range if a 15% greenshoe is included. The deal counted on an approximately 40% participation from its controlling shareholders, but was still struggling to get the additional orders needed to reach its goal, according to people following the sale. Bradesco and JPMorgan were global coordinators on the sale, with Banco do Brasil, Banco Votorantim, Itau and Santander as bookrunners.
ILC Ready for Debut
Chile’s Inversiones La Construccion (ILC) was expected to emerge today with pricing on an IPO targeting about $500m-equivalent. Books closed Thursday afternoon, with the sale heard at least 3x covered, according to a person close to the deal, and receiving better demand than expected from foreign accounts. ILC, the investment arm of non-profit Camara Chilena de la Construccion (CChC) is a holdco for health and health insurance firms including AFP Habita and Consalud and the Tabancura and Avansalud clinics. It is offering 3.7m primary shares and 28.5m secondary shares to be sold by CChC, which should maintain a 67% position. “The company has an ample national presence, which reaches close to 78% of the population through its different business lines. Its main subsidiaries, insurance and health care, operate in sectors with a growing number of users and adequate regulatory framework,” CorpResearch says in a report. The sale would raise CLP235bn ($485m) if done at CorpResearch’s recommended purchase price of CLP7,300. ILC is raising funds to capitalize its health care operations and for organic growth and acquisitions. Bank of America Merrill Lynch, IMTrust and JPMorgan are managing the sale, which includes both a local and a 144a portion. ILC follows last week’s pricing of $67m-equivalent IPO from Chilean berry exporter Hortifrut.
Taesa Recharges Equity Market
Brazil’s Transmissora Alianca de Energia Eletrica (Taesa) has priced a BRL1.76bn ($876m) equity sale, landing in the middle of the price range, in a deal that saw a far easier time than most Brazilian offerings this year. Investors signed up for close to 5x the shares on offer, according to sources familiar with the sale, drawn in by Taesa’s track record, dividend payments and the view that it enjoys more favorable regulatory conditions than others in Brazil’s electricity universe. “This is a defensive stock, and it stands out from a regulatory perspective. It’s a concession without surprises,” says a Brazilian portfolio manager looking at the deal. In the “re-IPO,” the Cemig transmission unit sold 27m units at BRL65.00 per unit, according to the CVM, the midpoint of a BRL60.00-BRL70.00 range. The unit total indicates the use of both a 15% greenshoe and 20% hot issue. A unit consists of one ordinary and 2 preferred shares. Brazilians accounted for about 50% of the demand, with 30% coming from the US, 10%-15% from Europe and the remainder from LatAm ex-Brazil and Aisa, according to bankers on the deal. The proceeds from the all-primary share sale are to be used for investments and expansion. Taesa pays a minimum of 50% of net profit in dividends, and says it paid 93% of net profit in dividends during the 2006-2011 period. In April, it approved a BRL428.5m payment, equal to BRL4.88 per unit. Bank of America Merrill Lynch, BTG Pactual, Banco do Brasil, Goldman Sachs and Santander managed the sale. Cemig had planned to improve Taesa’s float and raise funds through the sale since purchasing the Brazilian transmission assets of Italy’s Terna in 2009. Taesa becomes the only Brazilian equity transaction targeting the July-August pricing window to complete successfully. The others – IPOs for Pague Menos, Biosev, CPFL Energia, Manabi and Vix Logistica – are waiting for better market conditions later in the year.
Vesta Clinches Debut Equity
Mexico’s Corporacion Inmobiliaria Vesta has priced an IPO of at least MXP3.36bn ($254m), coming at the bottom of its price range. Vesta priced the shares at MXP19.00 each, according to a banker on the sale, versus a MXP19.00-MXP21.00 range. This would indicate a MXP3.36bn base deal, and MXP3.87bn size if the issuer placed all of the 203.8m shares available, including overallotment options. The industrial real estate specialist’s sale had been pushed back one day from Wednesday at the request of regulators, but was oversubscribed. The sale was aided by a preference for the real estate sector and the general bullishness on Mexico that has emerged this year, investors say. The total included 37.9m secondary shares sold by by members of the founding Corona family and other investors. Vesta plans to use 75% of the proceeds for the construction of new projects and the remainder for acquisitions. Credit Suisse and Santander managed. The developer is in 11 Mexican states and specializes in light manufacturing and distribution facilities.
Mixed Results Seen for IPOs
The fate of an IPO for Brazil’s Biosev remained uncertain late Wednesday night, while fellow Brazilian Transmissora Alianca de Energia Eletrica (Taesa) and Mexican Vesta were seeing strong demand for their offerings scheduled to price today, according to people following the sales. Biosev, the sugar, ethanol and bioenergy unit of Louis Dreyfus Commodities, was seeking to raise more than BRL700m ($345m), but had not priced as of late Wednesday night. The deal counted on an approximately 40% participation from its controlling shareholders, but was still needing to get the additional orders needed to reach its target, according to people following the sale. The lead managers declined to comment or were not available for comment on the status of the deal. More information was expected today. Despite any issues with valuation, the issuer is seen as a strong, diversified player likely to emerge as a consolidator in what is a very fragmented sector. Biosev is seeking to sell 41.2m primary shares, with the option of a 15% greenshoe and 20% hot issue, in order to raise funds for its expansion plan and to repay debt. It has 13 plants in operation, with 40m tons of processing capacity and 1,000 megawatts electric generation capacity, and plans to grow in the areas of sugar and ethanol production and energy generation. Bradesco and JPMorgan are global coordinators on the sale, and Banco do Brasil, Banco Votorantim, Itau and Santander are bookrunners. Meanwhile, Taesa was 3x subscribed heading into today’s scheduled pricing and Vesta was also oversubscribed as it pushed back its pricing one day until today, according to people following the transactions.
Taesa Sees Strong Demand
As of Wednesday afternoon, Brazil’s Transmissora Alianca de Energia Eletrica (Taesa) had received about 3x demand for its equity sale scheduled to price today, according to people following the transaction. In the “re-IPO” sale, the Cemig-controlled transmission operator is targeting about BRL1.5bn ($739m), based on a base offer of 20m units at the midpoint of a BRL60.00-BRL70.00 range, plus a 15% greenshoe. A 20% hot issue is also available. A unit consists of one ordinary and 2 preferred shares. Working in Taesa’s favor its status as a known entity – its shares are listed, but are illiquid enough for the sale to be priced as an IPO rather than a follow-on – its dividends and a more favorable regulatory environment compared to others in the Brazilian electric sector, according to investors. The proceeds will be used for investments and expansion. Bank of America Merrill Lynch, BTG Pactual, Banco do Brasil, Goldman Sachs and Santander are managing the sale.
Vesta IPO Waits a Day
Mexico’s Corporacion Inmobiliaria Vesta is now set to price its IPO today, pushed back one day from Wednesday at the request of regulators, according to sources following the deal. The industrial real estate specialist’s sale targeting about MXP4bn ($304m) was heard already oversubscribed as of Wednesday afternoon. “This is in many ways a bond proxy, when you have contracts and high occupancy, and strong income,” says an EM investor looking at the deal. He notes that Vesta’s portfolio stands out due to many blue-chip tenants, such as BMW. The deal is also helped by the more bullish view that has taken shape this year regarding Mexico’s growth prospects, particularly regarding the increased investment from the types of manufacturers that use Vesta’s facilities. Vesta is offering 177.2m shares at MXP19.00-MXP21.00 each, meaning a MXP4.08bn sale if priced at the midpoint and a 15% greenshoe is used. The base deal includes 50.7m primary shares to sold in Mexico, 88.6m primary shares to be sold internationally, and 37.9m secondary shares to be sold in Mexico by members of the founding Corona family and other investors. Vesta plans to use 75% of the proceeds for the construction of new projects and the remainder for acquisitions. Credit Suisse and Santander are managing. The developer is in 11 Mexican states and specializes in light manufacturing and distribution facilities.
Issuers Set to Test IPO Market
Two IPOs scheduled for today kick off a string of transactions expected to be the last equity new-issue activity before the traditional August hiatus. Louis Dreyfus Commodities’ Biosev is targeting more than BRL750m ($371m). The Brazilian is offering 41.2m primary shares at BRL16.50-BRL20.50 each, meaning a BRL877m size if done at the midpoint and a 15% greenshoe is used. Raising funds for its expansion plan and to repay debt, Biosev is expected to count on significant participation from its controlling shareholder in the deal. Bradesco and JPMorgan are global coordinators on the sale, and Banco do Brasil, Banco Votorantim, Itau and Santander are bookrunners. Mexico’s Corporacion Inmobiliaria Vesta is also testing the waters, selling 177.2m shares at MXP19.00-MXP21.00, meaning a MXP4.08bn sale at the midpoint and if a 15% greenshoe is used. Vesta plans to use 75% of the proceeds for construction of new projects and the remainder for acquisitions. Credit Suisse and Santander are managing. Thursday brings the largest of the pack, Brazil’s Transmissora Alianca de Energia Eletrica (Taesa), which is also the sale that investors and ECM bankers give the best chance of success. The Cemig-controlled transmission company’s “re-IPO” offers 20m units at BRL60.00-BRL70.00 each. This would indicate a BRL1.50bn sale if priced at the midpoint and a 15% greenshoe is exercised. The proceeds will be used for investments and expansion. Bank of America Merrill Lynch, BTG Pactual, Banco do Brasil, Goldman Sachs and Santander are managing the sale. Finally, Chile’s Inversiones La Construccion (ILC) should emerge Friday morning with pricing on an approximately $500m-equivalent IPO. The investment arm of Camara Chilena de la Construccion is offering 3.7m primary shares and 28.5m secondary shares. ILC is raising funds to capitalize its health care operations and for organic growth and acquisitions. Bank of America Merrill Lynch, IMTrust and JPMorgan are managing the sale, which includes bot