Mexico’s Alpek was due to price late Wednesday a MXP10.44bn-MXP11.96bn ($794m-$910m) IPO, which had been heard oversubscribed. The sale is to be the country’s first IPO since July with the Grupo Alfa-controlled petrochemicals producer looking to sell 379.8m shares, including an overallotment, at MXP27.50-MXP31.50 each. “This is an excellent company, and stands out in Mexico. This should be well-demanded,” says a participating Mexico City-based investor. He says the bottom half of the price range represented an attractive valuation, with the upper half starting to get expensive. Analysts had spotted the valuation at 6.9x-7.8x Alpek’s 2012 earnings, compared to Mexichem’s 7.6x and a 7.3x-7.5x sector average. The polyethylene and polypropylene producer, many of whose products are used in the food and beverage industry, is raising funds to repay debt and for general corporate purposes. Credit Suisse, Citi, HSBC and Morgan Stanley are managing the sale, in which 75% of the shares were marked for international distribution. The deal would be the first Mexican IPO since BanRegio raised MXP2.09bn in July, and could be the largest-ever IPO on the Bolsa. Larger debut sales from Mexicans, including Fresnillo, GAP and Telmex, were done on foreign bourses as ADRs or GDRs. Optimists – rising in number along with the country’s benchmark index and the likelihood of a change in government this year – hoped that the blue-chip deal would pave the way for increased levels of new issuance in Mexico. Santander Mexico is the big name in the pipeline, with others having considered a float including Credito Real, Cinepolis, Volaris and Ideal.
Category: Equity
Brazil IPO Market Returns to Earth
The euphoria from BTG Pactual’s highly-demanded IPO doesn’t appear to have rubbed off on the rest of the Brazilian pipeline, with furniture maker Unicasa Industria de Moveis’ BRL425.6m ($226m) debut landing well below its price range. This has been the fate of many smaller deals from the country in the past two years, as buyers disagree with issuers on price, even if the companies are solid and poised to capture the increasing spending power of the middle class. “This is an interesting company, but faces the same problem as many other small IPOs,” says a New York-based equity investor. “BTG was not like anything else. It will continue to be difficult,” he adds. Unicasa sold 9.1m primary shares and 21.3m secondary shares at BRL14.00 each, according to the CVM, versus a BRL16.50-BRL20.50 price range. The total includes a 15% all-secondary share greenshoe. Unicasa is yet another play on rising incomes in Brazil, selling to all of the country’s income brackets through its Dell Anno, Favorita, New and Telesul brands. It is raising funds for expansion, particularly via its New brand targeting the C class. A portion of the primary proceeds is also marked for paying a dividend to shareholders, according to the prospectus. The secondary shares in the sale were offered by controller Alexandre Bartelle and members of the Zietolie family. BTG Pactual, Itau and Santander managed the sale. The deal should be the last equity sale in Brazil for a while, with no other issuers filed.
BTG Upsizes IPO
BTG Pactual has priced a BRL3.66bn ($1.95bn) IPO, pushing on size, but not on price. With demand of more than 3x, the Brazilian bank used 75% of an overallotment option, while keeping the price in the middle of the range. Though sure to be one of the standouts in LatAm this year, it is not clear that the transaction is seen having a reviving affect on the country’s new issuance prospects going forward. “With demand of 3x, they could have priced at the top. But they want to see a sustainable performance in the short-term,” says a Rio de Janeiro-based asset manager. Investors also report the bank’s price range coming below what it had discussed in previous investor meetings. “It is definitely expensive, but there is scarcity value here,” says a New York-based equity investor, noting the lack of comparable financial institutions with the composition of BTG, particularly in the emerging markets. This made the deal difficult to value accurately, with most estimating around 2.5x book value at the middle of the price range, which compares with levels around 2x for other large Brazilian banks. The sale is seen implying a $14bn-$15bn total value for the bank. BTG priced 93.6m primary and 23.4m secondary units at BRL31.25 each, according to the CVM, versus a BRL28.75-BRL33.75 range. The total includes a 15% greenshoe and about 75% of an 18m share hot issue option. The deal was sold 40% to US investors, 40% to Brazilians, 10% to LatAm ex-Brazil, and 10% to the rest of the world, according to a source familiar with the transaction. The units each consist of one preferred and one ordinary share in Banco BTG Pactual, and one common and one non-voting common share in the BTG Pactual Participations offshore entity. The secondary shares were sold by 5 investment vehicles representing the holdings of investment firm JC Flowers and the Rothschild, Agnelli and Motta families. Proceeds will go towards BTG’s expansion. BTG itself was global coordinator, with Bradesco, JPMorgan, Gold
Fibria Adds Equity Support
Brazil’s Fibria has priced a BRL1.44bn ($766m) equity follow-on, according to the CVM, an all-primary share sale that raises funds to help improve the pulp and paper producer’s capital structure. It sold 91m shares, at BRL15.83 each, representing a 1.1% discount to Tuesday’s BRL 16.00 closing price. The total includes a 15% greenshoe. Though the improving story might still be challenging for some investors, the sale benefitted from a 60% anchor as Grupo Votorantim and BNDESPar exercised their rights and maintain stakes of 30% each. The sale is the entity’s first offering under the new Fibria name, though both Votorantim Celulose e Papel and Aracruz were longtime Bovespa members, and is done to raise funds for repaying debt and general purposes. Itau and Bank of America Merrill Lynch were global coordinators on the transaction, with Banco do Brasil, BTG Pactual, Deutsche Bank and Santander as bookrunners.
Tenaris Clinches Confab Delisting
Tenaris is to spend BRL1.31bn ($697m) to acquire outstanding shares of Brazil’s confab, reaching the amount it needs to delist its Brazilian subsidiary. The steel tube maker is paying BRL5.90 per common or preferred share to holders of 216.27m shares that accepted a tag along offer, Tenaris says. Outside of the auction, Tenaris also acquired 6m additional Confab shares in the market at the same price.
BTG Closes Heavy IPO Books
BTG Pactual elected to close books ahead of schedule Monday on an IPO targeting as much as BRL3.5bn ($1.86bn), ahead of pricing today. Books were heard Monday afternoon at more than 3x subscribed. Originally, the investment bank, preparing what could be the region’s biggest equity deal this year, was to close books today ahead of pricing this evening. The heavy order level has some optimistic that the deal could price near the top of a BRL28.75-BRL33.75 range. The range indicates a BRL2.98bn-BRL3.49bn deal size, if a 15% greenshoe is assumed. A 20% hot issue is also available if BTG elects to upsize. “They are asking a high price, but the there are a lot of people who just want a piece of this,” says a Sao Paulo-based equity investor looking at the deal, and expecting it to do well. Valuing the shop that is a combination investment bank, private equity manager, asset manager and other functions has been difficult, as there are few, if any, direct comps available. BTG has been heard describing the price range as implying a 2.2x-2.6x book valuation, while some investors and analysts figure the top of the range would mean more than 3x. The bank plans to sell 72m primary units and 18m secondary units, including a greenshoe made up of 10.8m primary units and 2.7m secondary units. The units each consist of one preferred and one ordinary share in Banco BTG Pactual, and one common and one non-voting common share in the BTG Pactual Participations offshore entity. The IPO will feature a Brazilian portion and an international portion done in Amsterdam. The secondary shares are to be sold by 5 investment vehicles representing the holdings of investment firm JC Flowers and the Rothschild, Agnelli and Motta families, who all bought into the bank through a 2010 private transaction. Proceeds will go towards BTG’s expansion, including international growth, strategic acquisitions and growing commercial banking, private equity and providing of specialized financial products. BTG Pactu
Fibria Set for Follow-on
Brazil’s Fibria is scheduled to price today a follow-on equity sale that could raise close to BRL1.3bn ($690m). The pulp and paper producer is raising funds for repaying debt and general purposes, in the latest chapter in a multiyear deleveraging story. The 86m primary shares, assuming a 15% greenshoe, would raise BRL1.29bn if done at Monday’s BRL15.00 closing price. “This is a very over-levered company, but it shouldn’t be difficult for them to raise the funds,” says a New York-based equity investor, noting that the anchor of Grupo Votorantim and BNDESPar exercising their rights should account for the bulk of the deal. Votorantim and BNDESPar are to maintain their postions of 30% each in the sale, according to the prospectus. The transaction is to be the first offering under the Fibria name, though both Votorantim Celulose e Papel and Aracruz – the companies that merged to form FIbria – were longtime Bovespa members. Itau and Bank of America Merrill Lynch are global coordinators, with Banco do Brasil, BTG Pactual, Deutsche Bank and Santander as bookrunners.
BTG IPO Heard Oversubscribed
Demand for BTG Pactual’s IPO is heard having passed the oversubscription point, ahead of pricing scheduled for Tuesday. The sale could raise BRL2.98bn-BRL3.49bn ($1.59bn-$1.86bn), depending on where it prices in a BRL28.75-BRL33.75 range. Though investors see a valuation as high as 3.0x book value, BTG has been describing the price range as implying a 2.2x-2.6x. The bank plans to sell 72m primary units and 18m secondary units, including a 15% greenshoe. The units each consist of one preferred and one ordinary share in Banco BTG Pactual, and one common and one non-voting common share in the BTG Pactual Participations offshore entity. The IPO will feature a Brazilian portion and an international portion done in Amsterdam. The secondary shares are to be sold by 5 investment vehicles representing the holdings of investment firm JC Flowers and the Rothschild, Agnelli and Motta families, who all bought into the bank through a 2010 private deal. Proceeds will go towards BTG’s expansion. BTG Pactual is global coordinator, with Bradesco, JPMorgan, Goldman Sachs, Citi and Banco do Brasil as joint bookrunners, and Morgan Stanley, Deutsche Bank and UBS as lead managers.
Familiar Story as Brazil Sees Year’s First IPO
Locamerica has priced a BRL314m ($167m) IPO, Brazil’s first of the year, continuing last year’s trend and landing below its range. The vehicle fleet rental agency sold 34.9m shares, including a 15% greenshoe, at BRL9.00 each, versus the BRL11.00-BRL14.00. Brazilian debut issuers, often seen by investors as strong companies well-positioned to ride the country’s domestic growth story, appear to still be in disagreement with buyers about pricing. “The vehicle rental sector has been recovering this year, and government stimulus measures should be beneficial. This is a sector with strong prospects, and fleet outsourcers are able to grow during both periods of economic strength and of contraction,” says a Sao Paulo-based equities analyst covering the sector. The Locamerica shares were heard sold 50% to Brazilian investors, 35% to US investors and 15% to European accounts. The sale included 22.7m primary shares, including the greenshoe, and 12.2m secondary shares owned by Banco Votarntim’s BV Empreendimentos e Participacoes private equity fund. Locamerica plans to use 60% of the proceeds for expanding its fleet and the remainder for working capital. Banco do Brasil, Banco Votorantim, Bank of America Merrill Lynch, BTG Pactual and Itau managed the transaction. Two more Brazilian IPOs, BTG Pactual and Unicasa, are both scheduled to price next week.
Qualicorp Lands Follow-on
Qualicorp has priced a BRL758.5m ($408m) equity follow-on, according to the CVM, finally giving Brazil its first marketed equity sale of the year. The health insurer is selling 45.97m secondary shares, including a 15% greenshoe, at BRL16.50 each, offering a 1.26% discount to Tuesday’s BRL16.71 closing price. In the selldown, US private equity firm Carlyle was to go from a 39.49% stake to a 26.03% position and founder Jose Seripieri Filho to reduce his share from 27.85% to 26.26%, according to a prospectus. Seripieri had initially wanted to walk away with just 19.85%, though pushback resulted in Qualicorp reducing the size of the deal by lowering the number of shares to be sold by Seripieri. Bank of America Merrill Lynch, Bradesco, Credit Suisse and Goldman Sachs managed the transaction, which started off a busy two weeks in the LatAm equity markets. Fleet rental agency Locamerica is up next, with an IPO expected at up to BRL488m Thursday.