Brazil’s new equity issuance pipeline is growing even as its market deals with global volatility and disappointing economic indicators. The Bovespa rebounded a bit Monday after suffering in the previous week, and for some, sagging prices might represent attractive entry points. Despite the volatility, domestic structural changes still have investment banks optimistic about the possibilities. “Asset management in Brazil is maturing, and there is more of a risk profile for smaller-cap issuers. This is a positive. We lack in Brazil a lot of industries, such as services, not represented on the exchange. If there is a market for them it will be healthy,” Christian Egan, global head of equities at Itau, tells LatinFinance. As interest rates drop, fund managers must work harder to find returns, and he notes that local demand has topped 50% of the books on some deals. There is a universe of small companies in Brazil that previously lacked appetite from investors, he explains. Trends toward specialized and small cap funds abroad should ultimately mean greater foreign participation as well, Egan says. For the moment, however, Egan says investors will need to see productivity numbers improve, noting his bank expects growth to pick up in the second half. International investors, as always, should still be needed to drive large deals. “Even BTG Pactual is down 20% [from its IPO price in April]. That doesn’t foster a lot of confidence, so [new issuance] will be challenging,” says a New York-based portfolio manager reviewing some of the recently-announced transactions. Recent growth numbers weren’t great and there is concern again about bank lending, he adds, while on the positive side inflation appears to be under control and retail sales were better than expected. CPFL Renovaveis, Suzano and Brazil Pharma have recently filed deals that should come in towards the larger end of the scale. LDC Bioenergia, Vix Logistica, Manabi and Celulose Irani have also joined the pipeline in the
Category: Equity
IFC to Buy into Carvajal Spinoff
The IFC plans to invest in Colombia’s Carvajal Empaques, through its IPO closing this week, Carvajal says. It does not say how much the multilateral is investing, and neither party responded to a request for additional comment. The Carvajal group is spinning off the maker of containers and packaging materials in a COP212bn ($121m) transaction, by selling 40m shares at COP5,300 per share. The order period is scheduled to close Thursday, with final allocation by May 29. It plans to use the proceeds to repay debt. Corredores Asociados is managing.
JBS Launches Vigor Exchange
Brazil’s JBS has launched a 1-for-1 exchange of up to 149.7m of its shares for new shares of its Vigor Alimentos dairy spinoff, it says. At a price of BRL7.96 per JBS share, the offer open through June 15 could be worth BRL1.17bn ($584m). Bradesco is advising JBS in the process. JBS shares closed at BRL5.87 Friday.
Brazilian Paper Co Plans FO
Celulose Irani is preparing to raise funds through a follow-on equity sale, it says. The maker of paper, packaging and resins plans a primary and secondary sale of units, each composed of 1 common and 4 preferred shares. It does not give additional details, and a prospectus has not been filed. Irani common shares closed at BRL1.38 Thursday and preferred at BRL1.51.
Developer Wraps Up RE CCD
Mexico’s Construtora Planigrupo has raised MXP2.475bn ($179m) through the sale of certificados de capital de desarrollo (CCD), it says, a final amount under the MXP2.75bn it had been estimating. The 2021 transaction creates a fund to acquire and develop new commercial centers throughout Mexico. As is customary in CCD transactions, the certificates priced at a nominal value of MXP100 each. About 60% of the funds raised are for developing centers, with the remainder to be used in acquiring new ones. Investors are to receive a return equal to 100% of their initial investment plus a 10% preferred return, with further proceeds divided 80% to investors and 20% to the manager. The transaction had originally been intended for the Fibra, or domestic REIT, market, but was moved to the CCD space on a technicality, without altering it significantly. Ixe managed the deal, with Goldman Sachs as structuring agent. US real estate-focused private equity investor Walton Street is co-investing $28m, according to the documents. Planigrupo’s is the second CCD of the year, following a MXP5bn raise by Mexico Retail Properties, a unit of US-based private equity manager Black Creek, for a fund targeting commercial and service-related real estate assets.
Mining Project Looks to Bovespa
Manabi, a pre-operational Brazilian iron ore miner, is planning to IPO, it says. The company founded last year is seeking funds in an all-primary share offer to develop its Morro Pilar and Morro Escuro projects in the state of Minas Gerias. The size and timing remain to be defined, though a filing this week suggests a launch as soon as late June. Credit Suisse, Goldman Sachs and Itau are managing the sale.
Fibra-Turned-CCD Set to Close
Mexico’s Construtora Planigrupo is set to close a MXP2.75bn ($199m) certificado de capital de desarrollo (CCD) transaction, according to regulatory documents. The 2021 transaction created a fund to acquire and develop new commercial centers throughout Mexico. As is customary in CCD transactions, the certificates price at a nominal value of MXP100 each. About 60% of the funds raised are for developing centers, with the remainder to be used in acquiring new ones. Investors are to receive a return equal to 100% of their initial investment plus a 10% preferred return, with further proceeds divided 80% to investors and 20% to the manager. The transaction had originally been intended for the Fibra, or REIT, market, but was moved to the CCD space on a technicality, without altering it significantly. Ixe managed the deal, with Goldman Sachs as structuring agent. US real estate-focused private equity investor Walton Street is co-investing $28m, according to the documents. Planigrupo’s is the second CCD of the year, following a MXP5bn raise by Mexico Retail Properties, a unit of US-based private equity manager Black Creek, for a fund targeting commercial and service-related real estate assets.
JBS Gets Spinoff OK
Regulators have approved JBS’ proposed BRL1.19bn ($596m) spinoff of its Vigor Alimentos dairy unit, JBS says. The Brazilian beef company plans to offer a 1-for-1 share exchange for up to 149.7m shares of Vigor at a minimum price of BRL7.96 each. Further details are expected within 10 days. Bradesco is advising JBS in the process. JBS shares closed at BRL6.09 Wednesday.
Suzano Launches Follow-on
Suzano Papel e Celulose plans to raise about BRL1.5bn ($750m) in an equity follow-on, it says. The Brazilian pulp and paper company is scheduled to start marketing June 11 and price June 27. The all-primary share offer is to include 80.0m ordinary shares and 164.9m preferred shares. Such a sale would raise BRL1.56bn at Wednesday’s BRL6.36 preferred share close, if the use of a 15% greenshoe is assumed. Suzano is raising funds to strengthen its capital structure. BTG Pactual, Itau and JPMorgan are managing the sale. Separately, Suzano has taken out a BRL2bn 2018 standby facility with BTG.
Iochpe Plots FO
Brazilian commercial and light vehicle parts producer Iochpe-Maxion is planning a primary equity follow-on, the company says, without giving additional details. “The realization and conclusion of the offer, as well as its exact structure, are subject to the approval by the company’s board and the conditions of the domestic and international capital markets,” the company says. Ichope needs fund for its international expansion plans. In November, it spent $195m on Mexican Grupo Galaz, and $725m on the acquisition of US-based auto-parts supplier Hayes Lemmerz. Iochpe shares closed Tuesday at BRL27.25.