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.
Category: Equity
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
Hortifrut Grows IPO Funds
Chile’s Hortifrut has priced a CLP33.2bn ($67m) IPO, raising slightly less than expected after accepting a price below its floor. The berry exporter had been targeting $75m-equivalent, and priced 103.6m shares at CLP320 per share, below the CLP340 minimum it had set. Analyst recommendations had ranged between CLP340-CLP370. Foreign buyers picked up 22% of the shares, according to regulatory documents, with local pensions buying 20%, other local institutions 21%, retail 20%, and local mutual funds 17%. In floating 29% of itself, Hortifrut is raising funds for investment in new facilities and export capacity, with an eye on opening new markets in Asia and LatAm. Celfin and Penta managed the sale. Shares closed Thursday at CLP311.93. The transaction offers hope to smaller issuers focusing mostly on local investors that deals can happen despite the international volatility that has hurt issuers relying on foreign buyers. Two Chileans are set to follow. Inversiones La Construccion is set to price next week a $500m-equivalent sale that also includes a 144a portion. Builder Echeverria Izquierdo is planning to raise about $100m in August.
Mexican VC Firm Closes CCD
Mexican venture capital firm Latin Idea Ventures has completed a MXP615m ($46m) certificado de capital de desarrollo (CCD) transaction, according to regulatory documents. Along with a parallel fund Latin Idea is raising, the CCD fund will target small investments in the telecom, media technology and service sectors. The parallel fund has had three closings and plans a fourth, with Latin Idea targeting a total fundraising of $100m-equivalent, including both the CCD and parallel funds. It will seek to make up to $15m investments – in $3m-$6m increments – in companies with competitive advantages in technology or innovation. The return structure of the CCD has investors recovering their initial investment plus a 13% preferred return, with remaining profits split 80%-20% between investors and the manager. Credit Suisse managed the CCD.
Hortifrut Set for IPO
Chile’s Hortifrut is scheduled to emerge this morning with the pricing of its IPO. The locally-focused deal should raise about $75m-equivalent from the sale of 103.6m shares, resulting in a free float of 29%. Analyst recommendations range between CLP340-CLP370 per share, suggesting a CLP36.78bn ($75m) total at the CLP355 midpoint. In offering a CLP360 recommendation, CorpResearch highlights Hortifrut’s status as a leading distributor in the US and Canada, the high commercial value of berries in all of its markets and diversified client base. The exporter of berries is raising funds for investment in new facilities and export capacity, with an eye on opening new markets in Asia and LatAm. Celfin and Penta are managing the sale. The deal should offer an indication of whether smaller local market equity deals in the region, and Chile in particular, can weather international uncertainty and successfully price.