EM equity funds brought in $3.5bn for the week ending January 25, with LatAm funds accounting for $270m of the total, according to EPFR. LatAm funds were up 1.68% for the week ended January 26 and up 12.23% for the year, according to Lipper. EM funds gained 1.95% on the week and have risen 9.78% on the year. That compares to a 1.50% weekly rise among global small and mid-cap funds, which have climbed 7.87% on the year.
Category: Equity
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Fund of Funds Marks First in CCD Market
AGC Controladora, a private equity manager affiliated with US-based Northgate Capital, has filed for a certificado de capital de desarollo (CCD) transaction in Mexico’s domestic market. The transaction is being called the first fund of funds in the CCD market, though it will be able to make direct investments in Mexican companies in addition to other PE funds. The private equity firm plans to raise up to MXP13bn through a 10-year fund, but is initially seeking MXP2.6bn, plus future capital calls. Regulators decision last year to allow capital calls in CCDS ended a debate that had slowed issuance for the 2-year-old asset class. Bankers are now optimistic that CCD market will resume activity at a healthier pace. The ACG fund plans to invest in a variety of sectors, but return structure varies somewhat from most PE fund-based CCDs. Investors receive their initial investment plus a preferred return equivalent to the Mexican Bolsa’s plus 500bp, before the managers take a 5% cut, with any remaining funds being divided between investors (95%) and managers (5%).Vector is managing the sale. AGC targets a closing of March 14, according to the documents, though CCD closings typically lag initial filings by several months.
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Pemex Settles Differences with Repsol
Pemex has agreed to work with the management of Spain’s Repsol and to keep its ownership stake in the company. The more cooperative stance marks major turnaround for the Mexican state-owned oil company, which up until now had sought to build alliances with other shareholders to revamp management at the Spanish firm. The companies are putting together a 10-year cooperation agreement that will involve working jointly in business opportunities that arise in the upstream, downstream and LNG sectors in the Americas, as well as the downstream business in Spain and Portugal, Pemex says. In Mexico, executives from both companies will evaluate and promote joint business opportunities as well. In turn, the Mexican state oil company has agreed to maintain a stake in Repsol of anywhere between 5% and 10%, and to “support the strategic plan and structure of the current Repsol management,” Pemex notes in a statement. It currently holds a 9.5% stake in Repsol. Pemex increased its stake to 9.5% last year and struck a failed agreement with Spanish builder Sacyr-Vallehermoso, another Repsol shareholder, to force a change in Repsol’s top brass. Pemex even considered spending an additional EUR854.3m to up its Repsol stake to 12.5%, and gain a greater say in the company. The deal fell apart, however, when the cash-strapped Sacyr was forced to sell half of its 20% stake back to Repsol in late 2011. “For the moment Pemex is not considering reducing its Repsol stake. We’ve put a 5% floor as a way to give us some room to maneuver but nothing more,” a spokeswoman says. Although the Mexican oil company enjoys generous after tax cash flows, the Mexican government’s tax take is considerable and the company struggles with lower oil reserve replacement and higher leverage than its international competitors.
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Vapores Adds to Equity Raise
Chilean shipping and ports operator Compania Sudamericana de Vapores has raised CLP63.51bn ($129m) in the public phase of its equity follow-on, adding to the $659m raised so far. The issuer, working under a $1.2bn capital raising approval last year to help straighten the company’s finances, sold 630m shares at CLP100.81 each, according to a regulatory document. Vapores got CLP12.61bn in demand from 52 orders, comprised 83% of institutional and 17% retail. Celfin managed the trade. Vapores is controlled by Quinenco, the investment arm of the Luksic group. The plan also includes the spinoff of the company’s port and logistics unit, Sudamericana Agencias Aereas y Maritimas.
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Duratex Gets BNDES Funds
Brazilian wood and metal products company Duratex is set to receive BRL273m in funds from BNDES. The development bank has agreed to acquire BRL100m in 2017 convertible domestic bonds, pending shareholder approval. The bonds are convertible at BRL12.87, which compares to a BRL9.50 closing price Tuesday. BNDES will also provide a loan of BRL173m, the details of which Duratex does not disclose. Officials at the company could not be reached for comment. Duratex, 35% controlled by the Setubal family, is raising funds to expand its plant in Itapetininga, Sao Paulo state.
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Brasil Travel Launches IPO
Brasil Travel Turismo e Participacoes has launched an IPO that could reach BRL1.21bn ($683m), setting a February 8 pricing date. The holdco formed in March 2011 for 35 companies involved in travel-related businesses plans to sell 170,000 primary shares and 466,500 secondary shares at BRL1,250-BRL1,650 each, according to regulatory documents. This would indicate a BRL1.21bn total size if priced at the top of the range, or BRL915m at the low end, assuming the use of a 15% greenshoe. The secondary shares are being sold by the founders’ holding vehicle, which is owned by ex-BTG Pactual partner Pedro Guimaraes, the Sette family and Jose Marcilio Nunes. Brasil Travel plans to use the primary proceeds to grow in Brazil and in other countries in LatAm, with about 85% of the funds to be spent on acquisitions. The deal is expected to leave Brasil Travel with a 40% free float. The issuer comprises companies spread throughout Brazil, which together posted BRL137m in Ebitda in 2010, and is headed by Paulo Castello Branco, a former VP of Brazilian airline TAM, and chaired by Guimaraes. Barclays, Credit Suisse, Flow Corretora and Santander are managing the sale. The deal sneaks ahead of a BRL1.44bn IPO from oil services provider Seabras, which had announced Monday a February 9 pricing. Fellow travel services provider CVC is also expected with an IPO in the first part of 2012. Outside of Brazil, Bancolombia’s $885m-equivalent follow-on is scheduled to close this week, and Peru’s Cementos Pacasmayo will debut its ADRs February 7, raising up to $300m.
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Seabras to Offer First Test of Brazil IPO Appetite
Seabras Servicos de Petroleo will soon test new issue demand in the LatAm equity markets after launching an up to BRL1.44bn ($823m) IPO that, if successful, could mark the region’s first such transaction this year. The deal will also be a litmus test for an oil sector that had mixed results last year. The Brazilian unit of Norway’s Seadrill has set February 9 to price the sale of 48m primary shares, setting a range of BRL20.00-BRL26.00. This would indicate a BRL1.44bn deal at the top of the range, or a BRL1.1bn sale at the bottom, assuming a 15% greenshoe is used in each case. A 20% hot issue is also available. “In the short-term we have seen some momentum, and some positive movement in the Bovespa. Some of the stronger companies that have been on standby may now give it a try, but it will not be easy,” says a Rio-based portfolio manager. The oil sector saw Perenco and Karoon cancel IPOs last year, and the troubles at Petrobras supplier Lupatech aren’t welcome news, but investors say success should come down to price. “There is demand for this type of deal; it just depends on price. The oil industry deals that were cancelled last year were mostly due to price,” says a Sao Paulo-based equity investor. He adds that Seabras may be aided by having a US-listed parent, providing a possible reference for valuations. The owner of 3 drillships with long-term Petrobras contracts was spun off last year and is raising funds for acquisitions and other investments as it looks to cover a wider range of oil field 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. It is also negotiating a 50-50 joint investment with pipe-laying support vessel operator and fellow Petrobras contractor SapuraCrest. BTG, Morgan Stanley, Banco do Brasil and HSBC are managing the transaction. Brazil Travel was also heard preparing to launch its IPO as soon as this week. Brazil’s Bovespa is up 9.9% so far this year, a
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LatAm Equity Books Light Inflows
EM equity funds brought in $1.92bn for the week ending January 18, while LatAm funds finally began to make a positive contribution to the total by booking $50m in inflows, according to EPFR. Performance continued to be strong, with LatAm funds up 3.56% for the week ended January 19 and up 10.35% for the year, according to Lipper. EM funds gained 3.67% on the week and 7.69% on the year. That compares to a 2.53% weekly jump among global small and mid-cap funds, which have climbed 6.27% on the year.
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Pacasmayo Sets NY Target
Peru’s Cementos Pacasmayo is heard aiming for February 7 to hold its New York follow-on, and plans to price the debut of its ADRs at $11.50-$13.00. The sale of 20m ADRs, representing 100m common shares, would raise $282m at the $12.25 midpoint, assuming a 3m share greenshoe is exercised. The offer is seen as essentially being an IPO for the cement company, as its Lima shares are relatively illiquid. The shares closed Friday at PES5.90 ($2.19). Pacasmayo is raising funds for the expansion of its La Rioja plant and also for the development of a phosphate and brine project. JPMorgan and Santander are managing the transaction. The deal is looking to be the first large equity offering of the year in LatAm. Others that are close to seeing the light of day include an IPO of Mexico’s Alpek, which could also happen in February, and IPOs from Brazilians Brazil Travel and Seabras, each expected to launch as soon as this week.
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Peru Miner to List in Lima
Dia Bras Exploration, a Toronto-listed Peruvian miner, has applied to list its shares on the Lima stock exchange. The precious and base metals miner with operations in Peru and Mexico expects approval by next month. It does not indicate whether such an operation would involve the raising of new funds.