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.
Category: Equity
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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
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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
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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.
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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.
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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.
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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.
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Brazilians to Kick off Equity Flood
The next 2 weeks will feature heavy issuance in the LatAm equity markets, beginning with Qualicorp. The Brazilian health insurer is to sell today 39.2m secondary shares, including a 15% greenshoe, meaning a BRL652m ($356m) deal if done at Monday’s BRL16.62 closing price. The holders lowered their sights from an originally planned 55.8m share deal that could have seen them pocket more than BRL900m. Bank of America Merrill Lynch, Bradesco, Credit Suisse and Goldman Sachs are managing. Fleet outsourcing provider Locamerica is to follow Thursday with an IPO of up to BRL488m, via Banco do Brasil, Banco Votorantim, Bank of America Merrill Lynch, BTG Pactual and Itau. The following Tuesday brings a BRL1.29bn follow-on from Fibria, through Itau, Bank of America Merrill Lynch, Banco do Brasil, BTG, Deutsche Bank and Santander, as well as the long-awaited IPO of BTG Pactual. The Brazilian investment bank could raise up to BRL3.5bn in its debut seen as a test for ECM prospects this year. BTG, Bradesco, JPMorgan, Goldman Sachs, Citi, Banco do Brasil, Morgan Stanley, Deutsche Bank and UBS are managing. Finally, April 25 will see Alpek attempt to revive Mexico’s ECM with a MXP11.96bn ($910m) IPO and Brazil’s Unicasa bring an IPO of up to BRL623m.
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Seabras Puts off IPO Again
Norway’s Seadrill has again postponed the IPO of its Brazilian Seabras Servicos de Petroleo unit, it says. It had initially hoped to sell in February, before pushing the deal to April, and is now targeting an IPO before the end of the year. The company is to adopt a master limited partnership structure, with the aim of lower future financing costs and increased dividend capacity, and has prioritized this ahead of the IPO. Seabras has completed the necessary corporate restructuring and received the required consents from Petrobras, with whom it has long-term drilling contracts. Seabras had been looking at raising up to BRL1.44bn ($787m) from an all-primary share offering. The owner of 3 drillships was spun off last year, and needs funds for acquisitions and other investments as it looks to cover a wider range of oilfield services in Brazil. It generated BRL524.7m in Ebitda in the first 3 quarters of 2011, up from BRL371.2m in the corresponding period in 2010. BTG, Citi, Morgan Stanley, Banco do Brasil and HSBC were hired to manage the sale.
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Colombian Targets REIT Sequel
Improving issuing conditions have Colombia’s Terranum Inversion planning to quicken the pace of share sales from its Patrimonio Estrategias Inmobiliarias (PEI) domestic real estate income trust, and follow up a recent $88m-equivalent sale with another this year, Terranum’s CEO says. “About $75m-$100m should come on line by the end of the year. Clearly there is a lot of appetite, but not a lot of product,” Jose Ignacio Robledo tells LatinFinance, noting that PEI remains the only REIT in Colombia. Normally, PEI would only issue once a year. The trust started in 2007 now stands at $450m-equivalent following a COP155.13bn ($88m) sale, its fourth tranche, last month. All but just over $10m-equivalent was sold to existing investors exercising their rights, he says, with about $900m-equivalent in demand for the small portion that remained for the open market. Participants included institutional investors and family offices, Corredores Asociados managed the sale. Despite the demand, there have yet to be other REIT imitators in Colombia, at least with the US market-inspired REIT structure that Terranum uses. Part of the challenge is finding single-ownership assets, as opposed to the multiple-owner format traditionally favored in Colombia, Robledo says. The former is better suited for a sale-leaseback deal and inclusion in the fund, and gettingg large corporations to do this has not been easy. The trend is positive however, improving from 5 years ago when companies needed to be convinced that owning all of their real estate assets made little financial sense. Retailer Exito is an example of a large corporate landowner that has seen the value of sale leasebacks, he says. The government implementing regulation defining a standard for REITs in Colombia would also help stimulate the asset class. With average returns around 15%, Terranum’s fund invests in corporate and retail centers in Colombia’s major cities, but is looking to branch out to more of the mid-sized cities. “Clea