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.
Category: Equity
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.
Taesa Nudges Back Equity Sale
Brazil’s Transmissora Alianca de Energia Eletrica (Taesa) has pushed back the pricing of its BRL1.2bn-plus ($588m) equity sale to July 19 from July 18, it says. In the “re-IPO” sale the Cemig-controlled transmission operator plans to sell 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. A 20% hot issue is also available. A unit consists of one ordinary and 2 preferred shares. 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. 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. July 18 proved to be a popular choice for IPOs in the region, with Mexico’s Vesta scheduled to price a $300m-equivalent deal and Brazil’s Biosev set to raise perhaps BRL800m on that date. A $500m-equivalent debut from Chile’s Inversiones La Construccion should finish up that week with a July 20 pricing. The wave of deals kicks off with a $75m-equivalent sale from Chile’s Hortifrut, closing books tonight with pricing out by Thursday morning. The region’s other IPOs that had filed last month with hopes of pricing before August – CPFL Renovaveis, Pague Menos, Vix Logistica and Manabi – are said to be waiting until later in the year.
VC Firm Set for CCD Close
Mexican venture capital firm Latin Idea Ventures is about to wrap up an approximately MXP650m ($49m) 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 is managing the transaction, closing today or tomorrow.
Chilean Builder Begins IPO Roadshow
Chile’s Echeverria Izquierdo has started marketing ahead of an August 3 IPO, according to a prospectus. The construction and engineering firm is planning to raise about $100m-equivalent, with investor meetings running through July 23 in Chile and Peru. Echeverria is planning to sell 151.3m shares, or about 25% of itself. The 34-year old civil engineering specialist is raising funds for its project pipeline and for expansion, including outside Chile. Already active in Peru and Argentina, it has projects in Colombia and Brazil. IMTrust is managing the sale. The deal would follow IPOs from Chilean berry exporter Hortifrut and health provider Inversiones La Construccion.
Chilean Health Provider Sets IPO Date
Chile’s Inversiones La Construccion (ILC) plans to price its approximately $500m-equivalent IPO July 19, it says, with the results out by the following morning. The investment arm of Camara Chilena de la Construccion, which is a holdco for health and health insurance firms including AFP Habita and Consalud and the Tabancura and Avansalud clinics, 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 both a local and a 144a portion. ILC would follow this week’s pricing of an approximately $75m IPO from berry exporter Hortifrut.
Embratel Calls off Net Delisting
Brazil’s Embratel is canceling plans to delist shares of its Net Servicos unit, after holders of the tiny sliver of the cable provider Embratel does not own refused the price offered in a tender, Embratel says. Last month, Embratel, controlled by America Movil, offered the shareholders BRL26.64 ($13.18) per share for the 1.8% of net it doesn’t own. Earlier this year, the telecom took control of Net’s holdco, after a purchase of 5.5% of the voting shares for BRL6.44m from Globo put it over the top. Embratel had planned to examine a restructuring of Net following a delisting. S&P has raised Net’s rating to BBB+ from BBB minus, it says, due to the control of America Movil likely providing financial support.
US Developer Eyes CCD
Hines, a Houston-based real estate company, is planning to raise funds in Mexico’s certificado de capital de desarrollo (CCD) market, according to regulatory filings. The transaction, whose target size has not been specified, would create a fund to invest in the development of commercial and residential properties throughout Mexico. The CCD should be 10 years in length, extendable by up to 2 years. The return structure would be similar to other CCDs — principal plus a preferred return, with remaining proceeds divided 70% to investors and 30% to the managers. BBVA and Credit Suisse are managing. Hines has $36bn AUM globally, and has been active in Mexico since 1992. Real estate investment vehicles are expected to boom in the next few years, with investors now having Fibra real-estate income trusts, CCDs and IPOs to choose from. At least three Fibras are in the pipeline, bankers say, following Fibra Uno’s debut for the class. Property developer Vesta is preparing an approximately $300m IPO to price July 18.
ECM Volume Down; Brazilians Lead
Overall ECM volume is again disappointing this year, with issuers raising $9.7bn through 37 deals in the first half, down 55% from the corresponding period in 2011 ($21.4 through 48 deals), according to Dealogic. It is the region’s lowest half-year volume since 1H 2009. The BRL1.5bn ($712m) Suzano follow-on last week vaulted BTG Pactual into the lead in the ECM league tables, with $1.15bn in volume from 10 deals, with the bank’s own IPO also having boosted its total back in April. The Brazilian bank is followed by Citi ($1.08bn from 6 transactions) and JPMorgan ($919m from 5). Issuers got off to a late start in 2012, with relatively little volume coming before March. “Nobody was ready in the first quarter. It was a bit frustrating. If the signs of a recovery had come a little earlier in 2011 we would have had more companies ready to tap the market in January and February,” Fabio Nazari, head of ECM at BTG, tells LatinFinance. Follow-on trades, dominant in the first half compared to IPOs, should continue to be responsible for most of the activity in a second half that is difficult to predict. “Given the fact that the market has been quite challenging, advisors are likely to be more honest with issuers about the feasibility of each deal. This brings confidence to those deals that do hit the road. Each one needs to be bulletproof,” he says. In terms of fees, BTG led with $26m in revenue, or 12.7% of the pool, followed by JPMorgan ($24m, 11.5%) and Citi ($16m, 7.7%).
Eventual Sigma IPO Likely: Alfa
Grupo Alfa sees an IPO for its Sigma Alimentos food products unit within the next few years, its CFO says. “At some point, when there are more growth projects in our portfolio, not specifically next year, but in the next few years, you could see Sigma coming out to the market,” Ramon Leal tells LatinFinance. New Mexican equity issuers have been hard to come by in recent years, but Alfa has been doing its part. The MXP10.44bn ($794m) IPO of its Alpek petrochemicals unit in April was the country’s first since July 2011. “Companies that are benefitting today from the growth of Mexico, that are mid-sized companies above $1bn, which are many in Mexico, are likely to get financed in the capital markets. I don’t think you will see a rate of issuances similar to Brazil, but you will start to see more companies coming to the market. The diversification of sources of finance will include for many Mexican companies the capital markets and the Bolsa in Mexico,” the official says.